Shares of Block (SQ), the payments company run by Twitter (TWTR) co-founder and crypto proponent Jack Dorsey, were downgraded to neutral from buy by investment bank Mizuho, which cited "user fatigue" and management's fixation with bitcoin (BTC).

Cash App's penetration among 18-45 year old Americans is likely to rise by just 500 basis points in 2022, which lags the 800-900 basis points seen annually over the previous three years, analyst Dan Dolev wrote in a note to clients on Tuesday.

In addition, Dolev noted that bitcoin accounted for only about 5% of gross profit in the first half of 2022, but occupies a far higher percentage of management's focus. Block's fixation with bitcoin hurts the stock performance and takes away attention on the company's larger platforms, Dolev wrote.

Dolev slashed his price target to $57 from $125. Earlier this month, Evercore ISI cut its rating on Block to underperform from outperform, and in July, Macquarie downgraded the stock.

Block's shares were down 1.8% in premarket action and are down 64% so far this year. They closed at $59.45 on Wednesday.

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