BlackRock stock price tumbles: What went wrong and what’s next

BlackRock stock price dived on Tuesday after the company published strong earnings. BLK plunged by over 5% to an intraday low of $1,040, down from a record high of $1,110. This article explains why the stock plunged and whether it is safe to buy the dip.

Why BlackRock stock price plunged after earnings

BlackRock, the biggest asset manager globally, published fairly strong earnings on Tuesday. Its year-to-date assets under management jumped by $152 billion, with its quarterly figure coming in at $68 billion. It ended the quarter with over $12.5 trillion in assets. 

The primary reason for the BlackRock stock crash is that it experienced a $52 billion one-time outflow from a client. It did not name the client, but chances are that it could be a sovereign wealth fund or a pension firm. 

The management emphasized that the outflow was a one-time and non-recurring event. Additionally, it noted that the outflow came from a low-cost fund, meaning its financial impact will not be significant in the future. 

Still, the company published strong financial results despite the outflow. It noted that its revenue jumped by 13% YoY, with most of this being organic. Only a small portion of the growth rate was attributed to the Global Infrastructure Partners purchase. 

The results showed that BlackRock’s inflows were mostly from its digital asset business, which is made up of Bitcoin and Ethereum ETFs. Its digital assets ETFs brought in about $14 billion in inflows. Indeed, the iShares Bitcoin Trust (IBIT) has become its most profitable funds because it has over $85 billion in assets and an expense ratio of 0.25%. 

BlackRock’s revenue jumped to over $5.4 billion, up from $4.8 billion. Its operating income was $1.7 billion, while its net income was $1.5 billion, up from $1.49 billion a year earlier.

Wall Street analysts are optimistic that the company will keep having double digit growth in a while, an important thing for a company that has been in the industry for decades. 

The average estimate is that its revenue growth will be 12.4% in the current quarter to $5.41 billion. It will then grow by 12.58% in the fourth quarter to $5.85 billion, bringing the annual figure to $22.6 billion. 

BlackRock’s earnings per share (EPS) is expected to grow to $45.7 this year and $51 next year. The actual earnings growth will likely be better than what analysts expect as it has done in the past.

BLK stock price analysis

The daily chart shows that the BlackRock share price has plunged in the past few days, moving from the year-to-date high of $1,150 to the current $1,040. It remains above the 50-day and 100-day Exponential Moving Averages (EMA).

It has formed an inverse head-and-shoulders pattern, a highly popular bullish continuation pattern. Therefore, I believe that the stock crash was a knee-jerk reaction nd that it will bounce back soon, and possibly hit the psychological point at $1,200.

The post BlackRock stock price tumbles: What went wrong and what’s next appeared first on Invezz