The Block share price plummeted 28% in June. Here’s why

Last month was a rough one for S&P/ASX 200 Index (ASX: XJO) tech giant Block Inc (ASX: SQ2).

While there was no direct news to explain the payment services provider’s share price plunge, the broader tech sector also tumbled in June.

As of the close of trading last month, the Block share price was $90.50 – 28.17% lower than it was at the end of May.

For context, the ASX 200 dipped 8.9% in June. Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) fell 11%.

Let’s take a closer look at what might have gone wrong for the company that acquired BNPL share and former ASX market darling Afterpay.

What dragged the Block share price lower last month?

Shares in ASX 200 giant Block tumbled along with the broader tech sector in June. And the blame might lie with inflation, interest rates, and a similar downturn in the US.

The Nasdaq Composite slipped 8.7% in June. The downturn saw it enter bear market territory – falling more than 20% from its March high amid rising rates and high inflation.

As my Foolish colleague Sebastian reported last week, tech stocks are particularly vulnerable to inflation as their often future-derived valuations and lack of present profitability pose greater risks in inflationary environments.

In fact, the Block share price plunged 15% the same day data outlining a surprise increase in US inflation was released.

Still, Block’s stock suffered a greater blow than the embattled ASX 200 tech sector last month. However, when compared to the overall performance of ASX buy now, pay later (BNPL) stocks, its share price actually outperformed.

Shares in the likes of BNPL favourites Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL) plunged around 50% last month.

As of the end of June, the Block share price was 48% lower than it was when it hit the Aussie market in mid-January.  

The post The Block share price plummeted 28% in June. Here’s why appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• What on earth happened to ASX 200 tech shares in June?
• June was a terrible month for ASX BNPL shares. Here’s why
• Could ASX BNPL shares be set for imminent regulation as spending swells to $12 billion?
• Here’s why ASX 200 tech shares are taking a beating on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/WzEZgjK