The Ultimate FinTech: Your Next Stock Deep Dive

Hey, GRIT VIPS! 🚀 Welcome to another stock deep dive written by Matt Allen. Let’s get into it!

This stock has been a favorite of mine for quite some time. However, until recently, I believed that it was overvalued. It is a massive favorite of Cathie Wood, who believes this stock will hit $500 by the end of 2025. Although this stock has been down this year because of its recent growth in 2023, I am still bullish!

Stock Deep Dive: Block (SQ-US, $38.2B MCAP)

• Overview 👉 What Does Block Do?

• By The Numbers👉 Key Metrics

• Growth 👉 Who Are They?

• Leadership👉 Who Are They?

• Risks 👉 Potential Pitfalls

Overview 👉 What Does Block Do?

Block, formerly known as Square, is a leading financial technology company founded in 2009 by Jack Dorsey and Jim McKelvey.

Initially launched to provide small businesses an easy way to accept credit card payments, Block has since evolved into a multifaceted financial services provider.

The company began with the Square Reader, a small device that enabled merchants to accept card payments via their mobile phones. This innovation democratized payment processing, empowering small businesses to compete with larger retailers.

In December 2021, Square rebranded to Block to reflect its broader ambitions beyond payment processing. The new name symbolizes building blocks and highlights its expansion into multiple financial services and blockchain technology.

Block operates through several key segments:

1. Square: The original business line, Square continues to provide point-of-sale (POS) solutions for merchants, enabling them to accept payments, manage inventory, and analyze sales data.

   • Example: A local coffee shop uses Square's POS system to streamline operations, from taking customer orders to tracking daily sales.

2. Cash App: A rapidly growing mobile payment service that allows users to send and receive money, invest in stocks, and buy Bitcoin.

   • Example: College students frequently use Cash App to split bills, while investors use it to easily buy fractional shares of their favorite companies.

3. TIDAL: Acquired in 2021, TIDAL is a music streaming service that connects artists directly with their fans.

   • Example: An independent musician uses TIDAL's platform to share exclusive content and engage with a loyal fanbase.

4. TBD: Focused on developing decentralized finance (DeFi) and blockchain solutions, this segment is a nod to Block's commitment to innovation in financial technology.

   • Example: TBD aims to create an open developer platform to build financial services without traditional intermediaries.

5. Spiral: Dedicated to advancing Bitcoin's use and development, Spiral works on open-source projects to improve the Bitcoin ecosystem.

   • Example: Spiral supports developers in creating more secure and user-friendly Bitcoin applications.

6. AfterPay: This allows consumers to purchase items immediately and pay for them in installments, offering a flexible payment option that attracts a wide customer base.

   Example: A consumer purchases a new PlayStation, but they pay for it in 4 different installments via AfterPay

By The Numbers 👉 How Is Their Financial Health?

In the first quarter of 2024, Block accumulated $5.96 billion in revenue, a big jump from previous years. This boost was caused by customers using the Square point-of-sale systems, more services on the Cash App, and more Bitcoin transactions through the Cash App.

Even though Bitcoin transactions are expensive, Block generated a gross profit of $2.09 billion in Q1, proving that its main business is profitable.

In the same quarter, the company's net income for shareholders was $472 million, which is $0.77 per share if you consider basic earnings or $0.74 per share if you consider diluted earnings.

Block spent money wisely on developing new products and marketing to attract more customers.

Subscribe to GRIT VIP to read the rest.