Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Fortescue Metals Group Limited (ASX: FMG)

According to a note out of Citi, its analysts have retained their sell rating and cut their price target on this iron ore giant’s shares to $17.00. This follows the release of a second quarter update which fell short of the broker’s expectations. This was particularly the case with iron ore price realisations, which have continued to weaken. Outside this, the broker believes the market is too optimistic on the Fortescue Future Industries business. The Fortescue share price ended the week at $19.45.

Premier Investments Limited (ASX: PMV)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating but lifted their price target on this retail giant’s shares to $23.60. While Premier Investments delivered a half year update ahead of the broker’s expectations, this was largely due to rental benefits. Without this, the result would have been in line with its estimates. In light of this and its long term concerns over the Smiggle business, the broker hasn’t seen enough to change its rating. The Premier Investments share price was fetching $28.40 at Friday’s close.

Qantas Airways Limited (ASX: QAN)

Analysts at Credit Suisse have retained their underperform rating and cut their price target on this airline operator’s shares to $4.40. The broker has reduced its earnings estimates to reflect rising oil prices. Its analysts have also warned that oil prices could get to US$100 a barrel, which could weigh on its margins. The Qantas share price ended the week at $4.73.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

More reading

• What has driven the Fortescue (ASX:FMG) share price up 40% in three months?
• Why analysts are bullish on these 2 ASX dividend shares
• Brokers name 3 ASX shares to buy today
• Are Virgin Australia shares set to rejoin the ASX soon?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price has risen by 40% over the past three months. What has been driving the ASX miner higher?

Fortescue is one of the biggest miners in Australia and it has rapidly recovered a lot of its lost market capitalisation. The Fortescue share price fell to around $14 in October.

The iron ore price is recovering

Fortescue is a substantial iron ore miner, one of the biggest in the world along with BHP Group Ltd (ASX: BHP), Vale and Rio Tinto Limited (ASX: RIO).

Miners have to accept the best price that they can get for the commodity that they produce. Resource prices can be volatile and cyclical.

The iron ore price was exceptionally high in the middle of 2021 thanks to Chinese demand. However, as Fortescue reached the final quarter of the 2021 calendar year, the iron ore price fell with China telling steel producers to reduce their output and improve their emissions profile as the Winter Olympics got closer.

Whilst the iron ore price fell to around US$80 per tonne in November, it has since come roaring back to around US$140 per tonne.

What does this mean for the Fortescue profit?

Profit expectations can have a sizeable impact on the Fortescue share price.

For Fortescue, extracting the iron ore from the ground largely costs the same whether the iron ore price is US$100 or US$150 per tonne. So, a higher iron ore price largely adds to the net profit apart from paying more money to the government as well.

Brokers had been expecting that the iron ore price would drop to around US$90 or US$80 per tonne this year. The consensus view was not that iron ore would see a recovery back above US$130 per tonne as we have seen.

What do analysts think of Fortescue now?

The broker Macquarie thinks that the Fortescue share price is a buy, with a price target of $21.

It was noted by Macquarie that Fortescue’s iron production in the second quarter of FY22 was good, but the discount paid for the ASX miner’s iron ore is increasing because it’s a lower grade than what is supplied by peers like BHP and Rio Tinto.

In the second quarter, Fortescue’s iron ore shipments of 47.5 million tonnes contributed to shipments of 93.1mt for the first half of the year, which was 3% higher than the first half of FY21.

However, there are plenty of brokers that don’t think the Fortescue share price is going to perform this year. UBS rates it as a sell with a price target of just US$14.90.

Credit Suisse has an even lower price rating of just $13.50, suggesting that it looks expensive compared to its peers. But it does see the potential for the green division of the company called Fortescue Future Industries (FFI).

The ASX miner recently announced the acquisition of UK-based Williams Advanced Engineering (WAE) for approximately US$223 million. It provides critical technology and expertise in high-performance battery systems and electrification.

The post What has driven the Fortescue (ASX:FMG) share price up 40% in three months? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• Top brokers name 3 ASX shares to sell today
• Broker tips Fortescue (ASX:FMG) share price to sink 30% and warns of dividend cuts
• 5 things to watch on the ASX 200 on Thursday
• Why Accent, BrainChip, Fortescue, and Novonix shares are sinking

Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Jumbo Interactive Ltd (ASX: JIN)

According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on this lottery ticket seller’s shares to $20.75. This follows the announcement of the acquisition of UK-based external lottery manager, StarVale. Morgans is a fan of the deal and notes that it is consistent with management’s strategy of expanding its business in the UK and North America. All in all, the broker remains attracted to the company’s long-term growth potential, structural tailwinds, and balance sheet position. The Jumbo share price ended the week at $17.47.

Nearmap Ltd (ASX: NEA)

A note out of Citi reveals that its analysts have upgraded this aerial imagery technology and location data company’s shares to a buy rating with a $2.10 price target. Its analysts made the move on valuation grounds following recent share price weakness. In addition, the broker suspects that Nearmap’s cash burn could peak this year, which it feels could boost investor sentiment. The Nearmap share price was fetching $1.25 at Friday’s close.

REA Group Limited (ASX: REA)

Analysts at Goldman Sachs have retained their buy rating but trimmed their price target on this property listings company’s shares to $168.00. According to the note, the broker is expecting a half year result ahead of the market’s expectations next month from the realestate.com.au operator. Goldman estimates that REA grew its revenue and EBITDA by 40% and 30%, respectively during the second quarter. This is up from 35% and 27% growth during the first quarter. The REA share price ended the week at $142.00.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Is February 2022 the time to buy these 2 beaten-up ASX shares?
• Analysts name 2 ASX shares to buy right now
• Top broker tips REA (ASX:REA) shares as a buy ahead of a ‘very strong result’
• Why Beach, Jumbo, Premier Investments, and Western Areas are pushing higher
• Jumbo Interactive (ASX:JIN) share price leaps 6% on acquisition announcement

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Jumbo Interactive Limited and Nearmap Ltd. The Motley Fool Australia owns and has recommended Nearmap Ltd. The Motley Fool Australia has recommended Jumbo Interactive Limited and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re wanting to diversify your portfolio with a little bit of exposure to the mining sector, then you may want to look at the ASX 200 mining shares listed below.

Here’s what analysts are saying about them:

Allkem Ltd (ASX: AKE)

The first ASX 200 mining share that could be in the buy zone in February is Allkem. It is the company that was formed from the merger of two leading lithium miners – Galaxy Resources and Orocobre.

Allkem is now a top five global lithium miner with a collection of world class operations. These include Olaroz, the Cauchari Lithium Project Joint Venture, Mt Cattlin, the Sal de Vida brine project, and the James Bay spodumene project.

Morgans is bullish on the Allkem and recently upgraded its shares to an add rating with a $13.25 price target. The broker notes that the company is its “preferred stock for lithium exposure.” This is due to it having a “strong December quarter and a long growth runway.” The Allkem share price was fetching $9.04 at Friday’s close.

BHP Group Ltd (ASX: BHP)

Another ASX 200 mining share to look at is BHP. It is one of the world’s largest mining companies with a collection of world class operations across a number of regions and commodities.

BHP’s operations span across Petroleum, Potash, Copper, Iron ore, Coal and Nickel. And while the company is in the process of spinning out its petroleum assets via a merger with Woodside Petroleum Limited (ASX: WPL), shareholders will be given a slice of the new company.

In addition, the Big Australian has been tipped to go on an M&A spree now that it has freed up capital following its unification. This could be supportive of earnings and dividend growth in the coming years.

The team at Macquarie is very positive on BHP. It has an outperform rating and $51.00 price target on the company’s shares.

In addition, the broker expects some generous dividend payments over the next couple of years. It has pencilled in fully franked dividends of ~$3.59 in FY 2022 and ~$2.62 in FY 2023. Based on the current BHP share price of $46.92, this will mean yields of 7.6% and 5.6%, respectively.

The post Analysts name 2 ASX 200 mining shares to buy in February appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Friday
• Is the BHP (ASX:BHP) share price a buy in all of this volatility?
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• 2 ASX shares to guide you out of this bloodbath: expert
• 2 ASX dividend shares with fully franked 7% yields

Motley Fool contributor James Mickleboro owns Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Life360 Inc (ASX: 360) share price was one of the best performers on the Australian share market in 2021.

Unfortunately, in 2022 it has been among the worst performers. Since the start of the year, the Life360 share price has lost 21% of its value due to broad weakness in the tech sector.

Is the Life360 share price good value now?

While the weakness in the Life360 share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.

In fact, if Bell Potter is on the money with its recommendation, there could be some significant upside for investors over the remainder of 2022.

According to a note this week, the broker has retained its buy rating with a trimmed price target of $13.50.

Based on the current Life360 share price of $7.64, this implies potential upside of 77% over the next 12 months.

What did the broker say?

Bell Potter has been running the rule over Life360’s fourth quarter update and liked what it saw.

The broker commented: “Life360 reported a strong 4Q2021 with q-o-q increases of 5% in global monthly active users to 35.5m (vs BP forecast 35.6m), 11% in global paying circles to 1.23m (vs BP forecast 1.15m) and 19% in revenue to US$35.0m (vs BP forecast US$33.5m). The company also met or exceeded all of its key guidance metrics.”

And while the broker has reduced its price target on the Life360 share price, it has only done this out of conservatism and not because it is becoming less bullish.

Its analysts explained: “We have updated each valuation used in the determination of our forecasts for the modest changes in our forecasts as well as recent market movements. We have also decreased the premium applied in the EV/Revenue valuation from 40% to 30% just for conservatism. The net result is a 10% decrease in our PT to $13.50 which is still a material premium to the share price and we maintain our BUY recommendation.”

The post Broker says Life360 (ASX:360) share price has ~80% upside appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy today
• 3 ASX small cap shares landing on an expert’s buy list
• Life360 (ASX:360) share price pushes higher after reaching 35.5m users in Q4
• 2 ASX growth shares analysts love
• 2 ASX tech shares to buy after the market meltdown

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• These two beaten-up ASX shares could be leading opportunities in February 2022 after the recent volatility
• Webjet is expecting to increase profitability as it gets back to pre-COVID scale and captures more market share
• REA Group’s profit and cash flow continues to rise. It’s seeing higher listing volumes and the company is predicting long-term international growth

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The last few weeks have been volatile for the ASX share market. Plenty of stocks have been beaten-up and could be opportunities for investors to consider.

Share prices change all the time. But it’s rare for the market to drop this much in such a short amount of time.

Between the start of 2022 to 27 January, the S&P/ASX 200 Index (ASX: XJO) had fallen around 10%. There was a bit of recovery on Friday, but most ASX shares are still far below where they were December 2021.

These two could have a strong future:

Webjet Limited (ASX: WEB)

Webjet describes itself as a digital travel business, spanning both global consumer markets (through ‘B2C’) and wholesale markets (through ‘B2B’).

WebBeds is the world’s number two player (and fastest-growing) accommodation supplier to the wholesale travel industry.

Webjet is the number one online travel agency (OTA) in Australia and New Zealand. Go-See, previously called Online Republic, is a market leading specialist in providing rental cars and motorhome bookings.

Since the start of the year, the Webjet share price has fallen 13%. In the last three months it has dropped 25% which includes market uncertainty about the impacts of the Omicron COVID-19 variant.

However, the business has plenty of long-term growth plans.

In Webjet’s half-year report it said that WebBeds had returned to profitability and it was on track to be 20% more cost efficient at scale. It also said that there is an increased market opportunity due to the B2C channel expansion, targeting previously untapped domestic markets and increasing North America market penetration.

WebBeds is looking to achieve an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 62.5%.

Webjet points out that competition has decreased as financial pressures impact the industry. WebBeds is targeting $10 billion of total transaction value (TTV) and it’s aiming to reach 14% of the global B2B TTV.

November 2021 TTV was tracking at 63%, though this was before the spread of the Omicron.

REA Group Limited (ASX: REA)

Since the start of 2022, the REA Group share price has fallen 17%. The real estate digital portal has seen a drop along with many other ASX shares.

However, the business is expecting to report growth in the first half of FY22 with a recovery of national listings.

The first quarter of FY22 showed a 35% increase in revenue after broker commissions to $264 million. There was also a 25% increase in EBITDA to $158 million and a rise of free cash flow of 20% to $49 million. That was despite the lockdowns in Sydney and Melbourne.

October national residential listings were up 16% year on year, with an increase in Melbourne of 20% and 29% in Sydney.

The company has also built a portfolio of assets of international digital property platforms. Some of the markets that it now has exposure to includes India, the US, Hong Kong, China, Malaysia, Singapore, Thailand, Vietnam and Indonesia.

However, the company noted that year on year growth rates are expected to slow as it cycles very strong period listing volumes, particularly in the second half, and regulatory measures to slow price inflation which could impact listing volumes.

The post Is February 2022 the time to buy these 2 beaten-up ASX shares? appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares last week
• Here are the top 10 ASX shares today
• Analysts name 2 ASX shares to buy right now
• Why is it when Jerome Powell sneezes, the ASX 200 catches a cold?
• When it comes to ASX shares, is it possible to pick the bottom?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re a fan of buy and hold investing, then you may want to look at the “champion stocks” listed below.

These are the ASX shares that the team at Bell Potter believe would be great investments over a period of three to five years.

Here’s why these are three of the broker’s champion stocks:

CSL Limited (ASX: CSL)

This leading biotherapeutics company is on the broker’s champion stocks list. Bell Potter is positive on the company due to growing plasma volumes and its burgeoning research and development pipeline.

The broker said: “A leading global company in the development, manufacture, and distribution of plasma therapies as well as non-plasma biotherapeutic products and influenza related products. The global growth in plasma volumes is expected to be around a solid 8% per annum for the foreseeable future and, in addition, the group is planning to launch new products from its very extensive Research and Development portfolio.”

Goodman Group (ASX: GMG)

Another ASX share that makes Bell Potter’s champion stocks list is Goodman. The broker believes it has a very bright future thanks to the favourable outlook for industrial and logistics properties.

Its analysts said: “One of the world’s largest integrated industrial property groups with operations centred around development, management and ownership throughout Australia, New Zealand, Asia, Europe, United Kingdom, North America, and Brazil. The long term outlook for industrial and logistics properties is favourable given the continuing growth in ecommerce (or on-line retail sales) and the growing middle class in developing countries.”

Netwealth Group Ltd (ASX: NWL)

A final ASX share on the list is Netwealth. Bell Potter believes this investment platform provider will benefit from market share gains and the structural shift that is happening in the industry.

Bell Potter explained: “A specialist investment platform technology provider in Australia that offers investment management solutions to financial intermediaries, who provide financial advice on superannuation and other investments, and self-directed individuals who have chosen not to seek advice. In recent years, the group has been taking market share from the institutional platform providers such as the major banks and other large diversified financial companies. Looking forward, a structural shift within the wealth management sector from large vertically integrated players towards the more independent players should further boost the group’s growth outlook.”

The post 3 ‘champion stocks’ for ASX investors in 2022 appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares to buy in the current bloodbath
• 2 quality ASX shares going for dirt cheap right now
• 3 blue chip ASX 200 shares to buy after the selloff
• Own CSL (ASX:CSL) shares? Here’s why the company is moving on from COVID research
• Top brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. and Netwealth. The Motley Fool Australia owns and has recommended Netwealth. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• There are some high-quality ASX tech shares that have been sold-off, which could be opportunities
• Doctor Care Anywhere, a telehealth business, is seeing a strong increase in organic revenue and growing its number of patients
• Volpara is a breast screening healthcare tech company which has a high gross profit margin and it’s growing its subscription revenue

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Some of the most promising ASX tech shares have seen significant falls in recent weeks. February 2022 might be the month to jump on some of these potential opportunities.

Technology can come in all forms. Some provide services through e-commerce, others provide office software, and so on.

But healthcare is also becoming increasingly technological. These two ASX tech shares could be ones to look at in February:

Doctor Care Anywhere Group Plc (ASX: DOC)

Doctor Care Anywhere describes itself as a UK-based telehealth company that connects patients with healthcare providers through its platform. It recently expanded into Australia with an acquisition as well.

The company recently announced how it performed in FY21, being the 12 months to 31 December 2021. Doctor Care Anywhere achieved revenue growth of 115.7% to $46.3 million. Included in that was 114.6% organic revenue growth, achieving and exceeding its guidance of at least 100% growth.

Profitability is increasing at the business. The gross profit margin went up 5.4 percentage points to 35.7% in the fourth quarter of 2021.

The growth rate is increasing. In the fourth quarter, revenue and consultations increased by 35.9% and 22.7%, respectively, compared to the third quarter of 2021. It also reported 50,500 new patients used the service during the last quarter, which was a new record.

It also recently announced a new operating model, which will see it provide multiple options for patients to receive care depending on their clinical requirement. This is expected to yield a “significant improvement” in margins and profitability.

The business says that it’s well-positioned to maintain its progress in 2022. Despite that, the Doctor Care Anywhere share price has fallen 20% in 2022 and 40% over the last six months.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is an ASX tech share that provides healthcare software. Specifically, it’s involved in breast screening and increasingly lung cancer screening.

It has built a market share of around a third in the US of women who have at least one Volpara product used on their screening images.

The Volpara share price has fallen by 18% since the start of the year.

However, the company continues to grow at a fast rate. A couple of months ago, Volpara announced its FY22 result which showed a number of interesting statistics. Its gross profit margin remained above 91%, the subscription revenue jumped 35% to NZ$11.8 million and annual recurring revenue (ARR) increased to US$20.4 million, up from US$12.8 million.

Volpara has been working on building relationships in the lung cancer space, which could help it over the long-term, including RevealDx and Riverain Technologies.

The ASX tech share’s average revenue per user (ARPU) continues to grow. It’s looking to grow the ARPU by selling a platform, not just a product, with its suite of products. It’s winning new deals which are on-boarding with an attractive ARPU. It can also upsell to existing customers – with clients that upgrade from old systems, it typically leads to a 200% to 300% increase in recurring revenue.

It’s also on the lookout for acquisition opportunities that can expand its customer reach, skills or products, to help increase ARPU and/or provide Volpara with technology for the future.

The post 2 top ASX tech shares for February 2022 appeared first on The Motley Fool Australia.

More reading

• 3 exciting small cap ASX shares to watch
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• Are these 2 ASX tech shares good buys in January?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Doctor Care Anywhere Group PLC and VOLPARA FPO NZ. The Motley Fool Australia owns and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you don’t have the funds to build a truly diverse portfolio, then exchange traded funds (ETFs) could be a quick fix. This is because ETFs allows you to invest in a large number of shares through just a single investment.

With that in mind, I have picked out three ETFs that trade on the ASX that could be good options for investors in February. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

If you’re wanting to gain exposure to the growing Asian economy, then the BetaShares Asia Technology Tigers ETF could be a way to do this. This ETF gives investors access to a number of the most promising tech shares in the Asian market. This means you’ll be owning a slice of well-known companies such as ecommerce giants Alibaba and JD.com, search engine company Baidu, and WeChat owner Tencent.

BetaShares Global Cybersecurity ETF (ASX: HACK)

The BetaShares Global Cybersecurity ETF. could be a good option for investors looking to invest in the the global cybersecurity sector. Included in the fund are quality companies such as Accenture, Cisco, Cloudflare, Fortinet, Okta, Splunk, Zscaler, Crowdstrike. These companies appear well-placed for growth over the next decade thanks to the increasing demand for cybersecurity services due to the growing threat of cyberattacks.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Finally, if you’re interested in the US tech sector, then the BetaShares NASDAQ 100 ETF could be the one for you. This ETF provides investors with access to the 100 largest non-financial shares on the famous NASDAQ index. Among the 100 shares included in the fund are household names and some of the highest quality companies in the world. This means you’ll be buying tech giants such as Amazon, Apple, Facebook/Meta, Microsoft, Netflix, and Tesla.

The post 3 high quality ETFs for ASX investors in February appeared first on The Motley Fool Australia.

More reading

• Are these 2 leading ETFs good buys in February 2022?
• Is the Betashares Nasdaq 100 ETF (ASX:NDQ) an opportunity in this market correction?
• 2 excellent ETFs for ASX investors in February
• 2 top international ETFs for ASX investors
• 2 strong ETFs for potential growth

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• Block’s shares have crashed since their listing on the ASX
• The tech selloff has weighed on its shares, as has rumours about Apple’s plans
• Apple could be about to disrupt the disruptor with its iPhones

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It hasn’t been a good start to life on the Australian share market for the Block Inc (ASX: SQ2) share price.

After trading as high as $178.88 shortly after their listing, the payments company’s shares have dropped 17% to $149.27.

Why is the Block share price under pressure?

While a good portion of the weakness in the Block share price has been driven by a selloff in the tech sector due to the prospect of interest rates rising sooner than expected, it isn’t the only reason for the underperformance.

The company’s shares have come under pressure this week amid reports that tech behemoth Apple could be on the verge of competing with Square in the payment terminal market. This is on top of existing speculation that Apple is interested in launching a buy now pay later (BNPL) offering that would compete with the newly acquired Afterpay business.

What’s the latest?

According to Bloomberg, Apple is currently developing a new payments service that will allow ‌iPhones‌ to accept debit and credit cards without any further hardware. All this technology requires is an NFC chip, which has been included in iPhones since the iPhone 6. This is made possible thanks to Apple’s acquisition of Canada’s Mobeewave for approximately US$100 million in 2020.

This means that small business owners would be able to take payments from customers without needing hardware like the Square Reader or the EFTPOS machines from Tyro Payments Ltd (ASX: TYR).

What impact this ultimately has on Block’s performance, only time will tell. But judging by the Block share price in recent days, investors appear concerned that it could slow its terminal and gross payment volume growth if Apple starts to win market share.

Though, it is worth remembering that Apple hasn’t confirmed this technology nor its BNPL aspirations.

The post Trouble in tech land may not be the only reason Block (ASX:SQ2) shares have dived 17% since listing appeared first on The Motley Fool Australia.

More reading

• What happened to ASX buy now, pay later shares today?
• 5 things to watch on the ASX 200 on Thursday
• What happened to ASX tech shares today?
• There’s a new kid on the Block (ASX:SQ2), but how does it make money?
• Has the Zip (ASX:Z1P) share price fallen on Block’s ASX debut?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and Tyro Payments. The Motley Fool Australia has recommended Apple and Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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