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Insightful Analysis of Block (SQ) Stock Trading Strategies Before and After Q4 Earnings Insightful Analysis of Block (SQ) Stock Trading Strategies Before and After Q4 Earnings

Block, Inc SQ witnessed a sharp uptick of over 5% on Thursday as the company gears up for its fourth-quarter earnings release after the closing bell.

Following an earnings beat in the third quarter, Block shares soared, hitting an 18% peak the next day before settling 10% higher.

During that quarter, Block outperformed expectations, reporting revenue of $5.62 billion, surpassing the $5.441-billion consensus projection. The company also posted earnings per share of 55 cents, exceeding the anticipated 47 cents.

Analysts peg the fourth-quarter earnings at 59 cents per share with revenues reaching $5.699 billion on average.

In anticipation of the earnings release, Wedbush analyst Moshe Katri upgraded Block from Neutral to Outperform, raising the price target to $90 from $70.

Traders seeking exposure to Block’s potential upside with added diversification could consider the AXS 2X Innovation ETF TARK, an actively managed double-leveraged ETF designed to mirror the performance of the ARK Innovation ETF ARKK, which holds a 6.02% stake in Block.

Those taking a bearish stance on Block can explore the AXS Short Innovation Daily ETF SARK, an actively managed ETF aiming to inversely track the daily performance of ARKK.

From a technical analysis standpoint, Block’s stock appears neutral leading up to the event, showing a sideways trend since Jan. 3. It should be noted that holding stocks or options through an earnings release is akin to a gamble, as stocks can react unexpectedly to beats or misses.

The Block Chart: Block has been fluctuating between the $62 and $70 levels since Jan. 3, predominantly trading under the 50-day simple moving average (SMA) but above the 200-day SMA. The 50-day SMA trending above the 200-day indicates a bullish cycle for Block.

  • Wednesday saw Block forming a lower low, invalidating its slight uptrend, and printing a doji candlestick, signaling a possible bottom. On Thursday, Block responded to the doji with a slight gap up, working towards a bullish kicker candlestick.
  • Bullish traders will anticipate a positive market reaction post-earnings, hoping for Block to confirm Thursday’s bullish pattern with a second gap up on Friday, potentially reversing a downward trend.
  • Conversely, bearish traders will watch for a negative market response to earnings, with Block falling below $62 on Friday. Such a move would establish Thursday’s peak as a lower high, confirming a downtrend for Block.
  • Key resistance levels for Block lie at $69.60 and $78.19, while significant support levels are found at $62.50 and $53.97.
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