$Block(SQ)$ is expected to release earnings on 02 May 2024 after the market closes (AMC).
Like many of the fintech firms, Block has been struggling to get their stock prices up. Block stock has been trading around $70 (±$20) for almost the last two years.
If we look at Block, we could see that Block is actually one of the companies that was seen as a high-growth alternative to $PayPal(PYPL)$ with the drawback being that this company did produce the kind of profits PayPal did.
And Block’s core business has shown no substantial slowdown in growth, and management appears to be executing very well. The drawback to me is no longer a cause for concern, as Block has recently turned profitable and is growing its profits rapidly.
PayPal Earnings and Cost Cutting For Block Maybe?
If we look at the recent PayPal earnings, it look a bit different this time around, but they still reflect the company’s efforts to cut costs.
IN 2023, Block revenue grew by 25% with net income for the whole year turning positive, at just $9.8 million. Net income is expected to rise significantly higher in the coming years.
Additionally, the company’s earnings per share are expected to rise from just $1.80 in 2023 to $6.40 in 2026. This means this fintech play is not only high growth but also highly profitable. But how about their expenses while maintaining such high growth, would there be a possibility of cost cutting coming up for this earnings release?
Block (SQ) Last Earnings Report
SQ last reported earnings on 22 February 2024 after the market close (AMC).SQ shares gained +16.1% the day following the earnings announcement to close at 78.92. Following its earnings release, 68 days ago, SQ stock has drifted -7.1% lower.
From the time it announced earnings, SQ traded in a range between 69.81 and 87.52. The last price (73.29) is closer to the lower end of range.
Estimated implied straddle for upcoming earnings is 12.4%. Even though there might be slight post-earnings sell-off, the overall competitive advantage remains with Block. Market setup entering the first quarter of 2024 is favorable, sustained spending in key sectors such as restaurants, retail, and beauty services should be able to help Block in their revenue.
What I would be interested to look at is how Block have been trading recently building up to its earnings release.
Block Trading Nicely Touching The 50-day MA period
If we looked at Block stock price movement recently, we will discover that it has stay above the 50-day period for more than 20 sessions, only to see a recent dip, but it has since make a move back touching the 50-day MA period.
With the market setup for the first quarter pretty impressive, we might see Block gaining from this optimism, I would expect some upside movement for Block.
Block Need More Demand (Buying) To Secure The Upside Signal
Looking at how Block has performed in terms of investors demand, it does not give a clear signal, though we do see MACD making a change, to the upside.
But this is not enough to provide a confirmation as we can see that Block is still trading sideway. So the key is how market would look at Block competitive advantage to determine if we can see more upside from Block.
Summary
Block price action today would be key to whether their competitive advantage can help to move its stock price. Considering that Fed statement is also due for release today (01 May), we need to be cautious as to how Block price action might behave.
I will monitor closely on Block trading as investors might take a step back and observe before going into buying position.
Appreciate if you could share your thoughts in the comment section whether you think Block could provide a stellar earnings on top of its competitive advantage.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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