Shares of Block (NASDAQ:SQ) stock are rising 2% today following a notable insider buy.
On Aug. 6, Sequoia Capital purchased 434,405 shares of SQ stock at average prices ranging between $56.85 and $57.82. While director Roelof Botha’s name is listed on the Form 4 disclosure, Sequoia made the purchase. The Form 4 is attributed to Botha because he is a partner at Sequoia and also a director at Block.
This is the second time that Sequoia, through Botha, has disclosed purchasing SQ during the past year. Its previous purchase of 540,646 shares was executed between Nov. 8 and Nov. 13 of 2023. These shares were acquired between $50.88 and $50.99 and were worth $27.51 million.
Sequoia Capital Adds $25 Million of SQ Stock
Other insiders at Block haven’t exactly been bullish based on their insider transactions. During the past year, insiders have purchased $52.51 million of SQ, although all of the buys are attributed to Sequoia through its connection with Botha. As for sales, insiders have sold $44.35 million during the past year, netting out to a total of $8.16 million worth of shares purchased.
SQ stock has struggled since 2021 and is miles away from its high of about $276 that year. Block isn’t alone, as many other fintech companies, such as SoFi (NASDAQ:SOFI) and Upstart (NASDAQ:UPST), have declined significantly compared to their 2021 highs.
That’s because the fintech industry, specifically payments, is highly competitive and continues to be dominated by legacy players such as Visa (NYSE:V) and Mastercard (NYSE:MA). Block’s Cash App offering is also in direct competition with Zelle and PayPal’s (NASDAQ:PYPL) Venmo. In other words, finding a sustainable moat in fintech is extremely difficult.
Block’s Struggles
In addition, Block’s sales growth has shown a consistent downtrend since the first quarter of 2023. During the second quarter, its sales grew by 11.21% to $6.16 billion, falling short of the analyst estimate for $6.28 billion. Its adjusted EPS of 93 cents topped the estimate for 84 cents, with gross profit growing by 20% to $2.23 billion.
Block reverted back to profitability during the fourth quarter of 2023 after posting eight straight quarters of negative GAAP EPS. That’s a good start, but the company still has a ways to go.
On the date of publication, Eddie Pan held a LONG position in SQ and PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
