Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Block, Inc. (NYSE: SQ) is focused on creating ecosystems for distinct customer audiences. The Company operates through two segments: Square and Cash App. The Square segment enables businesses (sellers) to accept card payments, which provides products and services to help its sellers start, run, and grow their businesses. It combines software, hardware, and financial services to create products and services that are self-serve. The Cash App segment provides an ecosystem of financial products and services to help consumers manage their money.

Kalkine’s American Tech Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

  Stock Performance:

• SQ has corrected by 32.33% in the past three months, furthermore with a 14.45% correction in the past six months.

• The stock is leaning towards its higher band of its 52-week range of USD 83.08 and 52-week low price of USD 38.85 Post the announcement of Q3FY23 results the stock has given a return of around 67.59%, with currently price is currently near an important support zone of USD 60-USD 65.
• The price is currently trading between its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of around 53.73.

 

1.2 The Key Positives, Negatives, and Investment summary

 

1.3 Key Metrics:

Block Inc.'s revenue exhibited remarkable growth from 2017 to 2022, starting at 2214 million USD and reaching a peak of 17661 million USD in 2021. The upward trajectory continued in 2022, with revenue remaining high at 17532 million USD. Concurrently, gross profit followed a similar pattern, starting at 839 million USD in 2017 and rising to 5992 million USD in 2022. These financial indicators underscore Block Inc.'s consistent market success, effective cost management, and sustained profitability over the analyzed period. Block Inc. demonstrated extraordinary performance with a 5-year Compound Annual Growth Rate (CAGR) of 51.26% for revenue and 48.17% for gross profit from 2017 to 2022.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~28.68% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc. and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~6.27% and ~3.90%, respectively.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY23:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

  Stock Performance:

• SQ has corrected by 32.33% in the past three months, furthermore with a 14.45% correction in the past six months.

• The stock is leaning towards its higher band of its 52-week range of USD 83.08 and 52-week low price of USD 38.85 Post the announcement of Q3FY23 results the stock has given a return of around 67.59%, with currently price is currently near an important support zone of USD 60-USD 65.
• The price is currently trading between its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of around 53.73.

 

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 12, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices. 

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