eastunder
2 months ago
Jack Dorsey's plan to reshape Square
Kate Fitzgerald
Fri, February 23, 2024 at 12:50 PM MST·5 min read
https://finance.yahoo.com/news/jack-dorseys-plan-reshape-square-195021334.html
After retaking day-to-day control as CEO of Square last fall, Jack Dorsey, who also heads Square's parent company, Block, surprised analysts with fourth-quarter profits that exceeded expectations, in part through aggressive cost-cutting. And he's just getting started.
Next, Dorsey aims to overhaul the 15-year-old Square app so that it works more cleanly with Block's booming peer-to-peer Cash App to act like a bank for sellers and others.
Block's goal is for Cash App to become one of the top providers of banking services to U.S. households earning up to $150,000 annually. The company will beef up the financial tools it offers, and make the P2P app the go-to banking source for Square sellers, Dorsey told analysts during a conference call to discuss earnings Thursday.
"We're going to start putting our Square customers first and foremost in the Cash App, and you'll really see the power of our combined ecosystems and a combined network," Dorsey said, noting that Cash App P2P features position the entity to operate as a "social bank."
The plan hinges on expanding features within Block's Cash App and the Cash App Card to close the distance between its own offerings and those of a bank. Block plans to add mobile check deposit, bill payment and wire transfers, Dorsey said in a shareholder's letter also released Thursday.
Cash App already offers a Visa debit card, two-days-early direct deposit, cash deposits, instant discounts on debit spending and an FDIC-insured savings account with no minimum balance and free overdraft insurance. Cash App also offers short-term credit through Borrow, as well as stocks and bitcoin services. Its banking services are supported by Sutton Bank and Lincoln Savings Bank.
As Block's consumer banking ambitions expand, so will scrutiny of the firm's payments security and regulatory compliance. Reports recently circulated that two whistleblowers have filed a complaint with the Financial Crimes Enforcement Network, the Securities and Exchange Commission and the Commodities Futures Trading Commission about Cash App's potential use by criminals for money laundering and terrorism financing.
Dorsey told analysts that Block is investing more deeply in security and compliance this year, adding that it means "continued focus on risk and fraud management, including protecting our customers from bad actors who attempt to abuse our platform through vectors like scams and phishing attacks," but he did not directly confirm any regulatory probes. Block did not respond to emailed inquiries about this topic.
Many of Dorsey's moves are aimed at shoring up internal operations that had frayed over the last decade when Dorsey wasn't directly managing the company, culminating in the sudden exit last year of Square's longtime CEO Alyssa Henry.
Robert Anderson, a Square founder, is rejoining the company "to focus on making design at Square world-class again," Dorsey said.
A top priority this year will be tightening the integration across Square sellers, Cash App and Afterpay, the company's buy now/pay later arm. Block immediately plans to eliminate "four or five" different versions of the Square app that previously targeted different user groups, creating a single app called Square, with tabs for users to access services targeting sole proprietors or restaurants, for example.
Block also plans to promote Afterpay within Cash App by displaying BNPL offers there, and also by inviting Afterpay app users to fund BNPL purchases with the Cash App Card, he said.
To boost growth at Square, the firm is trying out a new "pay as you go" model, offering some sellers free point-of-sale hardware in exchange for a higher card-processing rate. Square is also offering restaurants a bundle of business-management software tools at a discounted rate, and offering sellers new incentives for referrals.
Asked about the possibilities for expanding Square distribution through banks, Dorsey noted that years ago Square partnered with JPMorgan Chase to distribute Square readers through Chase's bank branches and "it wasn't that effective."
Noting that some banks are succeeding in distributing mobile payment acceptance tools through branches, Dorsey said he's still open to the idea, but it's secondary to the immediate need to modernize Square itself, including through the use of generative AI.
"[AI] is going to be extremely impactful for us as we look at everything that we're doing and all the tools that we're building and how much more productive it makes all of our engineers," Dorsey said. Additionally, AI "allows us to ship faster, allows us to correct mistakes much faster and really be ahead of the market," he said.
Block's gross profit for the fourth quarter was $2 billion, up 22% over the same period a year earlier. Cash App generated $1.2 billion, up 25% year over year. Square alone contributed $828 million to gross profit, up 18% year over year.
For the full year, Block's gross profit was $7.5 billion, up 25% over 2022.
Block raised its 2024 profit forecast by more than $200 million, and the company now expects to produce gross profit of $8.65 billion, which would be 15% above 2023.
The company has also cut staff through layoffs and attrition so employees number under 12,000, a level Dorsey plans to keep in place for the next several years, he said.
"We sense that work is underway to enhance growth by improving product velocity," said analysts at JPMorgan in a Thursday note to investors, adding: "The overall momentum of Cash App is impressive."
DiscoverGold
2 months ago
What to Expect from This Fintech Firm's Earnings
By: Schaeffer's Investment Research | February 21, 2024
• Block is expected to report earnings after tomorrow's close
• The stock has a tendency to move higher after quarterly results
Block Inc (NYSE:SQ) is slated to step into the earnings confessional after the market closes tomorrow, Feb. 22. Wall Street is anticipating the fintech concern's earnings to come in at 47 cents per share on revenue of $5.43 billion, representing a year-over-year gain for both figures.
Looking at Block's earnings history, its shares were higher after five of its past eight post-earnings sessions, including a 10.7% pop after its November report. In the last eight quarters, SQ averaged a swing of 8.9%, regardless of direction. This time around, the options market is pricing in a much larger move of 18.2%.
Ahead of the vent, Block stock is down 2.6% to trade at $64.03 at last glance. The $64 level and its 80-day moving average are both keeping the equity's pullback in check, as is stands well above its annual lows near the $38 area. While SQ is up 11.6% over the last six months, it sports notable double-digit percentage losses in 2024 and over the last 12 months.
Despite this year's underperformance, call traders have taken an increased interest in the stock. This is per Block stock's 10-day call/put volume ratio of 3.06 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all but 6% of readings from the past year, showing calls being snatched up at a much faster-than-usual rate in the last two weeks.
Read Full Story »»»
DiscoverGold
DiscoverGold
3 months ago
Fintech Stock Block (SQ) for Options Bulls
By: Schaeffer's Investment Research | February 2, 2024
• SQ looks like a perfect pick for call traders
• Square stock has layers of support in place
Fintech stock Block Inc (NYSE:SQ) is finding support near its 160- and 200-day moving averages, and recently experienced a double bottom on the hourly chart. Now in the midst of a roughly 20% pullback from its massive 2023 end-of-the-year run, a confluence of weekly moving averages are supporting SQ on the charts which makes now an intriguing time to speculate on the equity's next move higher.
Earlier in the week the stock pulled back near the 60-strike -- the second-largest put open interest 9OI) level -- and bounced off that area, nearly overtaking the peak put strike level of 65 before the weekend. There's room for analyst sentiment to turn higher, too, as 15 of 47 still rate SQ a "hold" or "sell."
Now looks like the ideal time to bet with options too, as Block stock's Schaeffer's Volatility Scorecard (SVS) tally of 90 -- out of a possible 100 -- indicates it tends to outperform options traders' volatility expectations. Our recommended call option leverage ratio of 5.3, and would double on a 20.2% pop in the underlying shares.
Read Full Story »»»
DiscoverGold
DiscoverGold
4 months ago
Block (SQ) could 'comfortably achieve' +16% gross profit growth next year - Mizuho
By: Investing | December 12, 2023
Mizuho analysts raised the firm's price target for Block (SQ) to $99 from $90 per share in a note Tuesday, maintaining a Buy rating on the stock.
The investment company's meticulous bottom-up model will help underwrite Block's 2024 gross profit.
"Consider our granular bottom-up models for SQ's major ecosystems. The models suggest that SQ could comfortably achieve +16% total company GP growth next year," explained the analysts.
For Square, the Mizuho analysts said they used the "historical capture of incremental V & MA volumes to help predict nearly $3.5bn of GP (ex-BNPL) in 2024 (+12% growth)." For Cash App, they "model each individual product, including Instant Deposit, Cash Card, and others" and overall, "expect +18% GP growth to $4.2bn (ex-BNPL)."
"Together (including BNPL & Corporate), we estimate $8.7bn of total company GP in 2024 (+16% growth)," said the analysts, adding that the price target was lifted due to better cost control and increased comfort around medium-term GP growth.
Read Full Story »»»
DiscoverGold
DiscoverGold
5 months ago
Clearbridge Investments LLC Makes New Investment in Block, Inc. (SQ)
By: MarketBeat | November 26, 2023
• Clearbridge Investments LLC purchased a new position in Block, Inc. (NYSE:SQ) in the 2nd quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The firm purchased 1,107,468 shares of the technology company's stock, valued at approximately $73,724,000. Clearbridge Investments LLC owned approximately 0.18% of Block as of its most recent filing with the Securities and Exchange Commission (SEC)...
Read Full Story »»»
DiscoverGold
DiscoverGold
7 months ago
Citi cuts estimates on Block (SQ); Removes stock from 'top picks'
By: Investing | October 4, 2023
Citi reiterated their Buy rating on Block Inc (NYSE:SQ) but cut their 12-month price target on the stock to $65.00 (from $90.00) and removed the company as one of their “Top Picks”.
Despite recent unfavorable events such as a 48-hour outage, third-party services indicating growth slightly below the consensus, and the unexpected departure of Square's division head within the last 60 days, Citi holds the opinion that the stock's decline of approximately 45% over the past two months, approaching its pandemic lows, is an excessive drop.
Aside from some recent difficulties in execution, Citi believes that the company is starting to move past several consecutive quarters of spending on infrastructure and compliance. This could potentially put the company in a position to achieve operating leverage gains at a faster pace.
Analysts wrote in a note, “Given known headwinds/hang-overs, we think the return of momentum will mostly rely on expectations beating nearer term, as well as improving earnings power, before the vision gets its due.”
SQ is expected to report their 3Q results in early November. Citi will be looking for any effects the outage that occurred in mid-August had on the company, while also gaining a clearer understanding of Jack Dorsey's strategy as he takes on a more prominent role in operating.
Citi also assumes management will discuss potential restructuring efforts as part of its focus on improving operational efficiency.
As a result of the outage-related losses, Citi adjusted their YoY GPV growth projection for the 3Q from approximately 12.4% to 9.5% (with the FY2023 revised from 14.2% to 13.0%). Additionally, Citi made reductions in other Seller revenue projections, considering the possibility of initial attrition.
Shares of SQ are down 0.33% in afternoon trading on Wednesday.
Read Full Story »»»
DiscoverGold
DiscoverGold
7 months ago
Block’s (SQ) Stock Continues to Falter Amid Financial Turmoil
By: Investing.com | October 4, 2023
Block, formerly known as Square, has been experiencing a significant financial downturn, with its shares plummeting nearly 45% since August, a trend confirmed by InvestingPro's real-time metrics, which show a 6 month price total return of -39.13%. The decline in stock price can be attributed to a series of setbacks including a two-day app outage and the abrupt departure of its CEO.
On Wednesday, Block's stock (NYSE:SQ) dipped an additional 0.9%, contrasting with the S&P 500's modest 0.4% rise. This recent drop further highlights the ongoing struggles the company is facing, and aligns with InvestingPro's tip that the stock has fared poorly over the last month.
In response to these challenges, Citigroup (NYSE:C) has adjusted its outlook on Block's shares. Initially setting a $90 price target, the banking giant has now downgraded it to $65. This new target suggests a considerable upside from Block's recent trading price of $41.41, which is in line with InvestingPro's fair value estimate of $74.91.
Despite the downgrade, Citigroup maintains a Buy rating on Block's stock. The bank views the recent plunge as an "overshot" and expresses confidence that the company's execution can rebound over time. They predict long-term growth potential for Block and anticipate a 25 to 30 times EV/Ebitda multiple, marking a decrease from their previous estimate of 35 to 40 times. This perspective is supported by InvestingPro's tip that net income is expected to grow this year.
Citigroup also emphasized the significant product development opportunities that lie ahead for Block, viewing them as key drivers for potential expansion in total addressable market (TAM). However, they caution that recovery will take time and suggest that the stock may be bottoming out. This aligns with another InvestingPro tip suggesting that the stock is in oversold territory.
Despite the current financial turmoil at Block, Citigroup's analysis presents a mixed outlook, acknowledging short-term difficulties while also highlighting longer-term growth potential and market expansion opportunities. For more detailed insights, consider exploring InvestingPro Tips, which offers a comprehensive list of 12 tips for Block, providing a more nuanced understanding of the company's financial performance.
Read Full Story »»»
DiscoverGold
Jones077
7 months ago
Block, a financial services company, has experienced an 82% decline in its stock price since August 2021, hovering around $50. The company has faced setbacks, including a negative report from Hindenburg Research and the sudden resignation of CEO Jack Dorsey. These events have contributed to the stock's decline, but there is still uncertainty about the company's future. Block has made strategic acquisitions to diversify its business, but questions remain about their effectiveness. The absence of a share buyback program raises concerns about the company's capital allocation strategy. Investors are left to consider Block's growth prospects in a highly competitive financial transaction services sector. While valuation metrics suggest that Block may be overpriced, other metrics provide a more nuanced picture. Technical indicators suggest a bearish trend with considerable downside risks in the short to medium term. Investors should proceed cautiously, considering the company's future, ability to weather challenges, and the competitive financial services industry.
https://seekingalpha.com/article/4637101-sq-downside-risk-outweighs-upside-potential-better-alternatives-exist
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
Monksdream
2 months ago
1984ISHERE
3 months ago
MightyX
4 months ago
Tiger Money
7 months ago
Hot Features
Premium
