On paper, Block’s varied businesses all are potentially sensitive to a weakening economic environment, and revenue and earnings are supposed to decline from last year. In reality, the story could be more nuanced—at least for now.
On paper, Block Inc.’s varied businesses all are potentially sensitive to a weakening economic environment, and revenue and earnings are supposed to decline from last year. In reality, the story could be more nuanced—at least for now.
The company’s Cash App business could also feel impacts from a rockier spending landscape, but the Cash App is linked to a debit card, and people traditionally use debit more for essential items that they’re less likely to do without. Susquehanna analyst James Friedman notes that the company’s Cash Card product “is exposed to high inflation spend categories such as gas and restaurants.”
Expect the company’s Cash App to be the star of the show when Block reports results Thursday afternoon, as the business sits at perhaps the heart of the controversy around Block’s stock. What to expect Revenue: Analysts tracked by FactSet expect Block to report $4.33 billion in revenue, down from $4.68 billion a year before.
Stock movement: Shares of Block have risen after seven of the company’s last 10 earnings reports. Block’s stock has dropped 71% over the past 12 months, as the S&P 500 SPX, +1.56% has declined 7%. With the stock having fallen by more than half so far this year, he wrote that “it’s hard not to want to be more constructive” on the name. Still, “the probability of a modest reset to numbers is likely warranted in the current context given concerns over possible recession, which would impact SQ’s end markets and consumers,” Perlin continued. “Assuming Q2/22 offers this reset, we believe investors could begin to re-engage in the stock.
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