Block’s Stock Crashes Even After Beat-And-Raise Quarter, 5 Analysts Deep Dive Into Print

Shares of Block Inc (NYSE: SQ) tanked in early trading on Friday, even after the company’s beat and raise quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Needham analyst Mayank Tandon maintained a Buy rating, while raising the price target from $80 to $82.
• KeyBanc analyst Alex Markgraff reiterated an Overweight rating and price target of $85.
• Susquehanna analyst James Friedman maintained a Positive rating and price target of $100.

Mizuho Securities analyst Dan Dolev reaffirmed a Buy rating and price target of $85.

JMP Securities analyst David Scharf maintained a Market Perform rating on the stock.

Needham: Block reported “solid” and better-than-expected quarterly results, “though GPV (gross payment volume) came in light due to a more challenging macro backdrop,” Tandon said in a note.

“SQ’s expanding product portfolio continues to see strong adoption rates from users in each segment,” he added.

KeyBanc Capital Markets: “Gross profit growth was multifaceted with call-outs around Square vertical POS (+37% y/y), Square banking products (+24% y/y) and broad Cash App growth (+37% y/y),” Markgraff wrote.

“Square GPV decelerated 5% to 12% y/y (food & drink +17% y/y), which held through July (stability noted May through July), reflecting similar directional trends observed across the U.S. payments sector in 1H23,” he added.

Susquehanna: “SQ reported a more muted trajectory in Square Seller, offset by strong Cash App upside, to land upside in overall consolidated gross profit,” Friedman wrote.

“We continue to model margin expansion, despite still leaving some dry powder to lean into investment,” he added.

Mizuho Securities: “Overall, it was nice to see GP growth accelerate to +27% in 2Q vs. April’s +24%,” Dolev wrote in a note.

“The deceleration in July to +21% will likely be a key controversy on the call,” the analyst said. “The key make-or-break will be management’s commentary around July growth trends by ecosystem, which we expect to hear on the call,” he added.

JMP Securities: The sell-off in Block’s shares at market open was probably “in response to signs of moderating GPV and transactional growth in the third and fourth quarter,” Scharf said.

“The company has stepped up its focus on expense management and confirmed that it will be further limiting headcount additions, further cementing updated guidance as being margin, versus incremental growth, driven,” he added.

SQ Price Action: Shares of Block had declined by 12.35% to $64.47 at the time of publication Friday.

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