Are Block Shares Overvalued? Here's What This Investor Found Upon Reassessment

Block Inc SQ is down more than 55% over the last year and it's finally time to pull the plug.

At least that's what Decatur Capital Management's Degas Wright decided to do on Friday after reassessing the stock's prospects.

"We graded Square about a D (rating) in our valuation process," Wright said on CNBC's "Fast Money Halftime Report."

He noted the stock is trading somewhere around 266 times earnings. That doesn't bode well for a company facing the headwinds that Wright sees in the near future.

More than 50% of Block's revenue comes from cryptocurrency fees, he said: "We're forecasting that cryptocurrency transactions are going down and so that's going to have a significant impact on their revenue."

Wright also expressed concerns about rising long-term debt and a decrease in earnings expectations.

"So we decided that this is a company that we did not want to hold," Wright said.

See Also: Wells Fargo Shared Its View On Block, Lam Research, Okta

Block is scheduled to announce its first-quarter financial results after the market closes on May 5, according to data from Benzinga Pro.

SQ Price Action: Block has traded between $82.72 and $289.23 over a 52-week period.

The stock was down 4.14% at $103.26 at time of publication.

Photo: courtesy of Block.