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Block Stock Price Dropped 7%. Here’s Why

Story Highlights

Block’s revenue and earnings declined from the previous year. However, the results managed to surpass Street expectations. Meanwhile, investors are loading up on the stock due to its operational strength.

Financial services and digital payments company Block, Inc. (NYSE: SQ) reported better-than-expected results for the second quarter ended June 30, 2022. However, revenue and earnings witnessed a drop from the year-ago quarter. Consequently, shares of the company declined by more than 7% in extended trade.

Revenue & Earnings Decline

Block reported quarterly net revenues of $4.4 billion, down 5.9% from the previous year. A sharp decline of 34.4% in bitcoin revenues dragged down the overall revenue figure of the company. However, the quarterly revenues still managed to surpass the consensus estimate of $4.33 billion.

The company reported earnings per share (EPS) of $0.18 for the quarter, which represents a massive decline of 63.3% from the year-ago quarter. The figure, however, topped the consensus estimate of an EPS of $0.16.

Block’s gross payment volume (GPV) for the quarter came in at $52.5 million, up 22.6% from the prior year.

Meanwhile, Block’s popular Cash App came up with mixed results. While revenues of $2.62 billion denote a year-over-year decline of 21%, gross profit shot up by 29% from the previous year’s quarter to $705 million. Notably, Cash App’s GPV increased by 4% from the year-ago quarter to $4.2 billion.

Investors Remain Optimistic About Block Stock

The decline in revenue and earnings notwithstanding, top investors are bulking up on the stock of the company due to its strong future prospects.

TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on SQ. Further, 9.8% of the top portfolios tracked by TipRanks, increased their exposure to SQ stock over the past 30 days.

Overall, the consensus among analysts for Block stock is a Strong Buy based on 29 Buys, seven Holds, and one Sell. The SQ average price target of $120.97 implies an upside potential of 34.9% from current levels. Shares have declined 68.2% over the past year.

Key Takeaways

Block’s revenue and earnings for the quarter surpassed analyst expectations, yet a year-over-year drop in both led to its stock tanking. However, operational strength in its popular Cash App and Square ecosystem continues to be growth drivers for the company.

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