Block Reports Record $472M Profit, Boosting S&P 500 Prospects

Block Inc. reports a record quarterly profit of $472 million in Q1 2024, exceeding analysts' estimates. The company lifts its full-year adjusted core earnings forecast and announces plans to allocate 10% of its gross profits from bitcoin-related products to additional bitcoin purchases.

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Aqsa Younas Rana
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Block Reports Record $472M Profit, Boosting S&P 500 Prospects

Block Reports Record $472M Profit, Boosting S&P 500 Prospects

Block Inc. (NYSE: SQ), the fintech company and parent of Square and Cash App, has reported a record quarterly profit of $472 million in the first quarter of 2024. This impressive earnings beat has significantly boosted the company's chances of being added to the prestigious S&P 500 index.

The company's strong financial performance is attributed to its strategic focus on balancing growth and profitability. Block's adjusted earnings per share (EPS) came in at $0.85, exceeding analysts' estimates of $0.62. Revenue for the quarter reached $5.96 billion, surpassing expectations of $5.75 billion.

Why this matters: The growth of fintech companies like Block has significant implications for the future of the financial industry, as they increasingly challenge traditional banking models. As Block expands its bitcoin offerings and integrates Afterpay, it may pave the way for wider mainstream adoption of digital assets and alternative payment methods.

In light of the impressive earnings, Block has lifted its full-year adjusted core earnings forecast. The company also announced plans to allocate 10% of its gross profits from bitcoin-related products to additional bitcoin purchases each month, demonstrating its commitment to the cryptocurrency. Currently, less than 3% of Block's resources are invested in bitcoin initiatives, a figure set to grow substantially.

CEO Jack Dorsey emphasized the importance of an "open protocol for money" aligning with broader movements towards cryptocurrency acceptance. Block's bitcoin expansion plans position the company to capitalize on the growing mainstream adoption of digital assets.

Block's acquisition of Afterpay, a buy now, pay later company, for $29 billion in 2021 is another critical component of its growth strategy. Although Afterpay experienced significant losses post-acquisition, the integration enhances Block's suite of financial products and services, positioning the company for long-term success in the fintech industry.

The investment community has responded positively to Block's earnings report, with the average 12-month price target from 30 Wall Street analysts standing at $90.42. This range indicates a potential upside of 26.80% from the current share price of $71.31. Block's stock price has risen following the announcement, and tech stocks, including Block, are expected to continue their momentum.

Founded in 2009 by Jack Dorsey and Jim McKelvey, Block has grown from a solution to a problem faced by McKelvey, who was unable to complete a transaction due to his inability to accept credit cards, to a publicly-traded company that netted $17.66 billion in revenue for 2021. The company employs more than 8,500 individuals across its footprint and operates as a network of businesses working together to expand access to the economy.

Block's record quarterly profit of $472 million in Q1 2024 and its strategic focus on bitcoin expansion and the integration of Afterpay position the company for continued growth and innovation in the fintech industry. With strong financial performance and a commitment to balancing growth and profitability, Block is poised to secure a spot in the S&P 500 index and solidify its position as a leader in the digital financial solutions space.

Key Takeaways

  • Block Inc. reports record quarterly profit of $472 million in Q1 2024.
  • Adjusted EPS of $0.85 beats estimates, revenue reaches $5.96 billion.
  • Company lifts full-year adjusted core earnings forecast, allocates 10% of bitcoin profits to additional purchases.
  • Block's bitcoin expansion and Afterpay integration position it for growth in fintech industry.
  • Stock price rises, with 12-month price target indicating 26.80% potential upside.