Mon Dec 02 14:40:00 UTC 2024: **Block (SQ) Stock: A Potential Underdog Set for Growth?**
NEW YORK, Nov 27, 2024 – Despite its impressive growth in financial services, Block Inc. (NYSE: SQ) has lagged behind the broader market in recent years, with its stock only rising 32% in the past five years compared to the S&P 500’s 107% return. However, analysts are increasingly optimistic about Block’s future prospects.
The company is actively integrating its Square and Cash App platforms to create a more independent payment ecosystem, reducing reliance on major networks like Visa and Mastercard. This strategy aims to maximize transaction fees by facilitating payments directly between Cash App users and Square merchants using Cash App Pay, Cash App Card, or Afterpay. While still a small player in a massive market (57 million monthly Cash App users and $59.9 billion in Q3 gross payment volume), this approach shows potential for significant growth.
Block’s commitment to Bitcoin, including investments in hardware wallets, mining equipment, and Bitcoin-related initiatives, is another key factor influencing its future trajectory. While critics question this focus, proponents argue it aligns with Block’s broader mission of financial empowerment and could yield substantial returns if Bitcoin’s price continues to rise.
Recent positive developments include surging profits driven by efficiency gains, with projected adjusted operating income reaching nearly $1.6 billion in 2024 (a 344% increase year-over-year). This positive outlook is reflected in the stock’s 24% increase in November alone, currently trading at a price-to-sales ratio under 2.4 – significantly below its five-year average. This has led some to predict Block will outperform the S&P 500 by 2029.
However, it’s important to note that The Motley Fool’s Stock Advisor team did not include Block among its top 10 stock picks. Investors should conduct thorough research before investing.
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