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Block stock analysis. Ticker: $SQ
Block is a 46 billon dollar company made up of several businesses; Square, Cash App, Spiral, Tidal and TBD. The company also owns over 8,000 bitcoin which at the current price is worth around $440 million dollars.
Chief Block Head Jack Dorsey reported the company’s earnings last week causing the stock to jump around 18%. The company has made almost 22 billion dollars of revenue over the last 12 months, 9.8 million of net income and 1.8 billion of adjusted ebitda.
But, Block’s revenue is skewed by bitcoin trading on the Cash App. Because accounting rules require the company to recognise the entire value of a bitcoin transaction, Block’s 9.5 billion of bitcoin revenue provides barely any profits
So a better metric to judge Block is gross profit and on this grounds the company has had a strong 12 months. It’s grown 25% to 7.5 billion led primarily by payment processor Square which grew 16% to 3.1 billion and cash app which grew 33% to 4.3 billion.
And the company also posted a reassuring outlook. Gross profit this year should climb at least 15% and adjusted ebitda should come in above $2.6 billion which translates to an adjusted ebitda margin of 30%. So, with a current enterprise value of $44 billion the stock is valued at under 17 times adjusted ebitda.
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