Why Investors Should View the Q2 Report as an Opportunity to Buy Block Stocks
Shares of Block (NYSE: SQ ) fell a day after it reported its second-quarter 2023 numbers on Aug. 3. Although the fintech company, which owns the Square ecosystem and the Cash App, posted strong growth numbers and raised its outlook, some signs pointed to a slowdown in growth in the third quarter.However, upon closer examination of all the numbers, the positives seem to outweigh the negatives. With a lower stock price adding another incentive, that should give investors all the more reason to add to Square's parent stock.
In order to properly assess the latest results, we have to adjust to the fact that Block buys Bitcoin cryptocurrency for users to trade. This forces the company to consider the volume of Bitcoin sales as income. Because of this, gross profit, which subtracts the cost of bitcoins, better reflects Block's true income status.
In the second quarter, that gross profit was nearly $1.9 billion, a 27% increase over the same quarter last year. This was largely due to a 37% increase in Cash App gross profit, even as the Square ecosystem grew by 18% over the same period.
Although operating expenses rose 19%, Block reported an operating loss that resulted in a net loss of $126 million. This represented an improvement over a net loss of $209 million in the same quarter last year. Also after stripping out expenses such as stock-based compensation, adjusted core net income was $246 million, up 125% year-over-year.In addition, Block raised its 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) forecast to $1.5 billion and now believes it will report an operating profit during the year.
So why the drop in share price?
Still, Block announced some bad, or at least less good, news. In its Q2 2023 earnings report, Square and Cash App's July gross profits rose 15% and 27%, respectively. While positive, this is a significant reduction from Q2.
Management also said existing vendor gross payment volume (GPV) declined between the third quarter of 2022 and the second quarter of 2023. The company blamed this on lower consumer spending and revealed that churn rates -- the proportion of customers who stopped using the service -- remained steady.
These reports likely contributed to the stock's negligible growth for the year. While that still means it has outperformed rival PayPal, it hasn't taken off like many of its tech peers.However, one has to question whether such a report calls for a 14% drop in the share price, especially when there are plenty of positives to be found in the details.
First, non-US markets account for 16% of the company's gross profit, up from 15% a year ago. While this is slower growth from 2021, when international gross profit was 8%, the Square segment has not added any countries since the service launched in Spain in January 2022. So all the improvements have come through internal growth.
Additionally, the Cash App ecosystem continues to grow, with the second quarter setting a record for peer-to-peer volume reaching $53 billion. Also, 54 million people transacted on the Cash App in June, up 18% in one year. Therefore, while the slowdown in consumer spending has slightly reduced individual usage, the growth of the Square and Cash App ecosystems should more than offset these reductions.
Consider block stocks
.jpeg "Why Investors Should View the Q2 Report as an Opportunity to Buy Block Stocks Shares of Block (NYSE: SQ ) fell a day after it reported its second-quarter 2023 numbers on Aug. 3. Although the fintech company, which owns the Square ecosystem and the Cash App, posted strong growth numbers and raised its outlook, some signs pointed to a slowdown in growth in the third quarter.However, upon closer examination of all the numbers, the positives seem to outweigh the negatives. With a lower stock price adding another incentive, that should give investors all the more reason to add to Square's parent stock. In order to properly assess the latest results, we have to adjust to the fact that Block buys Bitcoin cryptocurrency for users to trade. This forces the company to consider the volume of Bitcoin sales as income. Because of this, gross profit, which subtracts the cost of bitcoins, better reflects Block's true income status. In the second quarter, that gross profit was nearly $1.9 billion, a 27% increase over the same quarter last year. This was largely due to a 37% increase in Cash App gross profit, even as the Square ecosystem grew by 18% over the same period. Although operating expenses rose 19%, Block reported an operating loss that resulted in a net loss of $126 million. This represented an improvement over a net loss of $209 million in the same quarter last year. Also after stripping out expenses such as stock-based compensation, adjusted core net income was $246 million, up 125% year-over-year.In addition, Block raised its 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) forecast to $1.5 billion and now believes it will report an operating profit during the year. So why the drop in share price? Still, Block announced some bad, or at least less good, news. In its Q2 2023 earnings report, Square and Cash App's July gross profits rose 15% and 27%, respectively. While positive, this is a significant reduction from Q2. Management also said existing vendor gross payment volume (GPV) declined between the third quarter of 2022 and the second quarter of 2023. The company blamed this on lower consumer spending and revealed that churn rates -- the proportion of customers who stopped using the service -- remained steady. These reports likely contributed to the stock's negligible growth for the year. While that still means it has outperformed rival PayPal, it hasn't taken off like many of its tech peers.However, one has to question whether such a report calls for a 14% drop in the share price, especially when there are plenty of positives to be found in the details. First, non-US markets account for 16% of the company's gross profit, up from 15% a year ago. While this is slower growth from 2021, when international gross profit was 8%, the Square segment has not added any countries since the service launched in Spain in January 2022. So all the improvements have come through internal growth. Additionally, the Cash App ecosystem continues to grow, with the second quarter setting a record for peer-to-peer volume reaching $53 billion. Also, 54 million people transacted on the Cash App in June, up 18% in one year. Therefore, while the slowdown in consumer spending has slightly reduced individual usage, the growth of the Square and Cash App ecosystems should more than offset these reductions. Consider block stocks Amid the decline in the stock price, investors appear to have an excellent opportunity to add shares of Block. It wasn't a perfect message. However, the Square and Cash App ecosystems are growing at a rapid pace, and even if growth slows somewhat due to the economy, gross profit for Block should continue to grow at a double-digit rate.If Block can maintain this pace, the fintech stock could post positive GAAP net income within a few quarters, increasing the likelihood of a long-awaited rally in Block's share price. SPONSORED BY: 10 Stocks We Like More Than BlockWhen our team of analysts has a stock tip, it can pay to listen. After all, the newsletter they've been running for over a decade, the Motley Fool Stock Advisor, has tripled the market.*They just revealed what they believe are the ten best stocks for investors to buy right now... and Block wasn't one of them! That's right - he thinks these 10 stocks are an even better buy. Check out 10 stocks *The Warehouse Advisor goes back to August 1, 202Will Healy has positions in the Block. The Motley Fool has positions and recommends Block and PayPal. The Motley Fool recommends the following options: short September 2023 $67.50 on PayPal. The Motley Fool has a disclosure policy. In the fast-paced world of investing, informed decisions are the key to success. Financial reports for the second quarter (Q2) provide crucial insight into company performance and represent a prime opportunity for savvy investors to buy promising stocks. This is especially true for Block Stock, a potential market game changer. In this article, we'll dive into why investors should consider the Q2 report a unique opportunity to invest in Block Stock, exploring the company's growth prospects, recent successes, and its potential impact on portfolios. Impressive performance in Q1: Block Stock's outstanding performance in Q1 set the stage for even more remarkable growth in Q2. With a significant increase in sales and a strategic expansion plan that has come to fruition, the company has demonstrated its ability to benefit from new market trends. As an investor, taking advantage of the opportunity presented by the Q2 report can allow you to ride the momentum of this growth story and potentially reap significant returns. Innovative technological solutions: Block Stock's innovative technology solutions have gained attention across industries. From cutting-edge blockchain applications to revolutionary supply chain management tools, the company is at the forefront of innovation. Investors who recognize the efficiency and cost savings potential of these solutions will find the Q2 report a compelling case for investment. Including relevant keywords like “investment in blockchain technology” and “disruptive solutions” can increase the SEO performance of the article. Market share expansion: The Q2 report is likely to reveal Block Stock's progress in expanding its market share. With a growing customer base and partnerships with industry giants, the company's market presence is expanding rapidly. This is a key aspect for investors to consider, as increased market share translates into higher earnings and potentially better stock performance. Including keywords like “market expansion strategy” and “market share increase” can attract organic traffic to the article. Positive trends in the field: Investors always benefit from aligning their decisions with broader industry trends. In the case of Block Stock, the company operates in sectors with huge growth potential, such as fintech, logistics and cyber security. By investing in a company that is poised to capitalize on these trends, investors can achieve long-term success. Strategic use of keywords such as \"fintech investment opportunities\" and \"cyber security growth stocks\" can optimize an article's search engine visibility. Diversification of portfolios: Adding Block Stock to an investment portfolio can lead to better diversification. A diversified portfolio mitigates risk and provides a buffer against market volatility. Investors looking to increase portfolio resilience and maximize returns may consider the Q2 report a gateway to achieving those goals. The Q2 report is more than just a financial update; it is a strategic opportunity for investors to tap into the potential of Block Stock. With strong performance, innovative technological solutions, expanding market share and in line with positive trends in the industry, Block Stock holds the promise of substantial returns. When investors realize the strategic advantage of investing following the Q2 report, they can position themselves for success in the ever-evolving stock market environment. So take advantage of this golden opportunity and consider Block Stock as your next smart investment. move. Your portfolio could thank you in the coming quarters.")
Amid the decline in the stock price, investors appear to have an excellent opportunity to add shares of Block. It wasn't a perfect message. However, the Square and Cash App ecosystems are growing at a rapid pace, and even if growth slows somewhat due to the economy, gross profit for Block should continue to grow at a double-digit rate.If Block can maintain this pace, the fintech stock could post positive GAAP net income within a few quarters, increasing the likelihood of a long-awaited rally in Block's share price.
SPONSORED BY:
10 Stocks We Like More Than BlockWhen our team of analysts has a stock tip, it can pay to listen. After all, the newsletter they've been running for over a decade, the Motley Fool Stock Advisor, has tripled the market.*They just revealed what they believe are the ten best stocks for investors to buy right now... and Block wasn't one of them! That's right - he thinks these 10 stocks are an even better buy.
Check out 10 stocks
*The Warehouse Advisor goes back to August 1, 202Will Healy has positions in the Block. The Motley Fool has positions and recommends Block and PayPal. The Motley Fool recommends the following options: short September 2023 $67.50 on PayPal. The Motley Fool has a disclosure policy.
In the fast-paced world of investing, informed decisions are the key to success. Financial reports for the second quarter (Q2) provide crucial insight into company performance and represent a prime opportunity for savvy investors to buy promising stocks. This is especially true for Block Stock, a potential market game changer. In this article, we'll dive into why investors should consider the Q2 report a unique opportunity to invest in Block Stock, exploring the company's growth prospects, recent successes, and its potential impact on portfolios.
Impressive performance in Q1:
Block Stock's outstanding performance in Q1 set the stage for even more remarkable growth in Q2. With a significant increase in sales and a strategic expansion plan that has come to fruition, the company has demonstrated its ability to benefit from new market trends. As an investor, taking advantage of the opportunity presented by the Q2 report can allow you to ride the momentum of this growth story and potentially reap significant returns.
Innovative technological solutions:
Block Stock's innovative technology solutions have gained attention across industries. From cutting-edge blockchain applications to revolutionary supply chain management tools, the company is at the forefront of innovation. Investors who recognize the efficiency and cost savings potential of these solutions will find the Q2 report a compelling case for investment. Including relevant keywords like “investment in blockchain technology” and “disruptive solutions” can increase the SEO performance of the article.
Market share expansion:
The Q2 report is likely to reveal Block Stock's progress in expanding its market share. With a growing customer base and partnerships with industry giants, the company's market presence is expanding rapidly. This is a key aspect for investors to consider, as increased market share translates into higher earnings and potentially better stock performance. Including keywords like “market expansion strategy” and “market share increase” can attract organic traffic to the article.
Positive trends in the field:
Investors always benefit from aligning their decisions with broader industry trends. In the case of Block Stock, the company operates in sectors with huge growth potential, such as fintech, logistics and cyber security. By investing in a company that is poised to capitalize on these trends, investors can achieve long-term success. Strategic use of keywords such as "fintech investment opportunities" and "cyber security growth stocks" can optimize an article's search engine visibility.
Diversification of portfolios:
Adding Block Stock to an investment portfolio can lead to better diversification. A diversified portfolio mitigates risk and provides a buffer against market volatility. Investors looking to increase portfolio resilience and maximize returns may consider the Q2 report a gateway to achieving those goals.
The Q2 report is more than just a financial update; it is a strategic opportunity for investors to tap into the potential of Block Stock. With strong performance, innovative technological solutions, expanding market share and in line with positive trends in the industry, Block Stock holds the promise of substantial returns.
When investors realize the strategic advantage of investing following the Q2 report, they can position themselves for success in the ever-evolving stock market environment. So take advantage of this golden opportunity and consider Block Stock as your next smart investment. move. Your portfolio could thank you in the coming quarters.
0 Comments