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Monday, August 8, 2022

Block Reported a Beat, So Why Are Shares Down?

In this video, I will go over Block‘s (SQ -1.41%) Q2 earnings report and explain why I will be buying more shares. The company reported a beat on earnings per share and revenue, but the stock is down.

  • The company reported total net revenue of $4.4 billion in the second quarter of 2022, down 6% year over year (YOY), beating estimates by $70 million.
  • Earnings per share came in at $0.18, beating estimates of $0.16. 
  • Excluding Bitcoin, total net revenue in the second quarter was $2.62 billion, up 34% YOY. And gross profit was $1.47 billion, up 29% YOY, and up 47% on the basis of a three-year compound annual growth rate. 
  • Bitcoin revenue was $1.79 billion, down 34% YOY, and Bitcoin gross profit was only $41 million. 
  • The company reported a $36 million Bitcoin impairment loss, which hurt the company’s earnings. 
  • Square GPV, which came in a bit weaker than expected this quarter because of the current macro environment, is expected to be up 18% YOY for the month of July. 
  • The company is planning on reducing its investments for the full year by $250 million. 

Overall, I was happy with how this quarter turned out, given the broader market uncertainty, and that’s why I am looking to add to my position on any weakness in the stock.

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*Stock prices used were the closing prices of August 2, 2022. The video was published on August 2, 2022.

Neil Rozenbaum has positions in Block, Inc. The Motley Fool has positions in and recommends Bitcoin and Block, Inc. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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