To The Moon

$Block(SQ)$ will be releasing its third quarter 2024 financial results for the third quarter of 2024 on 07 Nov (Thursday) after market close.

For the most recent quarter, Block was expected to post earnings of $0.76 per share, but it reported $0.93 per share instead, representing a surprise of 22.37%. For the previous quarter, the consensus estimate was $0.62 per share, while it actually produced $0.85 per share, a surprise of 37.10%.

Earnings per share is expected to come in at $0.88. So I am expecting a EPS surprise from Block.

Strong Positioning in the Digital Payments Industry

Block’s strong positioning in the digital payments industry on the back of its robust payment and point-of-sale (POS) solutions. Its rich partner base, including the likes of Wix, Restaurant365, and Intuit INTU, has been a key catalyst.

Block is expanding its footprint among beauty and wellness providers with new partner integrations that include Salon Interactive, Vish, Submatic, Pomp, SalconScale, and Glammatic. It inked a distribution partnership with SalonCentric that will bring Square’s hardware and software offerings to more beauty professionals.

Block (SQ) GPV (Gross Payment Volume) Set To Grow Like Q2?

Block's Buy Now Pay Later (BNPL) platform, Cash App Card, and Cash App Borrow all showed strength, benefiting the overall performance of the Cash App. The Square ecosystem also saw solid traction, generating $1.98 billion in revenues, a 9% increase year over year. The company's gross payment volume (GPV) in the second quarter amounted to $61.94 billion, a 5% increase from the year-ago quarter.

Block's card-present GPV was up 9% from the year-ago quarter, while the card-not-present GPV reflected year-over-year growth of 4% in the second quarter. Cash App accounted for $3.57 billion of the overall GPV, despite a decrease of 27% year over year. Block continues to expect to reach its 'Rule of 40' target by 2026 and has boosted its financial guidance for 2024 for several metrics, including gross profit.

The brand Square is one of several payment gateways that exist within North America. The United States payment gateway market was estimated at 38 billion U.S. dollars in 2023, a higher total than various countries combined. Square is a predominantly focused on North America: Seven out of 10 websites worldwide that use Square as a check-out option in 2023 came from either the United States or Canada.

If we looked at how Block payment gateways have been gaining traction in multiple industries. We could see a significant growth from this segment.

Technical Analysis - MACD and Multi-timeframe (MTF)

Block have been trading pretty positively above the short-term and long-term MA, but we need to understand that there have been some news of Block layoffs, but could this layoffs be something positive as Block try to maximize their profits.

From the technicals, we do not have a confirmed uptrend from MTF and MACD could make a downside movement as well, but I would be watching the Fed meeting on interest rates decision on 06-07 Nov, because this could affect Block, the last time rate cut was announced, Block did quite well.

I would be watching the price action for Block today (06 Nov).

Summary

Block strong position in the payment gateway sector and their partnership with multiple industries have produced results in the last reported quarter, we could be seeing higher GPV.

Block's quarterly GPV reveals the company faced declining growth. The company announced in Q3 2023 it had to refocus operations to achieve the so-called Rule of 40 by 2026. This meant the combined gross profit growth and adjusted operating income margin had to reach or go beyond 40 percent. To reach this, Block announced it would put a cap on new hires, possibly lowering their number of employees before the end of 2024 to increase the company's operating margin.

Appreciate if you could share your thoughts in the comment section whether you think Block would be able to improve its profit through cost cutting?

@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.