Block Shares Up 4% in Premarket as Company Reports Solid Q1 Results
Block, a payments and technology firm founded by Twitter co-founder Jack Dorsey, published its financial report for Q1 2023 that showed notable revenue and Cash App growth. The company’s shares rose 4.2% ahead of the market open on Friday.
Block’s Revenue Rose 26% Annually
Shares of Block are up 4.2% in premarket trading Friday after the fintech firm reported better-than-expected earnings and revenue for Q1 2023 as its Cash App continued to see strong growth. The stock stood at 60.43$ at the time of the writing.
Block’s total net revenue came in at $4.99 billion in the quarter that ended Mar. 31, up 26% year-over-year. This compares to consensus estimates of $4.59 billion, according to Refinitiv.
Block reported a Bitcoin gross profit of $50 million in Q1, while the total sale amount of bitcoin sold to customers – which the company recognizes as bitcoin revenue in the report – stood at $2.16 billion. Bitcoin gross profit was 2% of bitcoin revenue, the report added.
Total gross profit in the quarter rose 32% from a year ago to $1.71 billion. Gross profit from Cash App jumped 49% year-over-year to $931 million, while Square generated a gross profit of $770 million, 16% higher than in the same quarter last year.
Block said it did not recognize a bitcoin impairment loss in Q1 2023. This marks a notable improvement in Block’s bitcoin operations from the previous quarter when the company posted a bitcoin impairment loss of $47 million.
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Cash App Seeing Growth Despite Hindenburg’s Allegations
Block’s strong Q1 results, particularly its Cash App growth, will likely be closely followed by investors after US short-seller Hindenburg Research disclosed its short position in Jack Dorsey’s payments firm.
In March, Hindenburg disclosed it had shorted Block and accused the company of committing “frictionless” fraud, inflating Cash App user numbers, and ignoring anti-money laundering regulations, among numerous other allegations. Hindenburg’s report came just months after the company described India’s Adani Group as “the largest con in corporate history.”
But Jack Dorsey’s company quickly denied Hindenburg’s allegations, saying it would take legal action against the short seller after its “inaccurate and misleading” claims. There have been no significant developments in the Block-Hindenburg story since then.
Cash App continued to grow in the latest quarter despite Hindenburg’s serious allegations against the payments app. What do you think this suggests? Let us know in the comments below.