The former Twitter CEO’s company Block will reduce its 2022 investment target by $250 million
The former Twitter CEO’s company Block will reduce its 2022 investment target by $250 million
Jack Dorsey-led Block Inc. said it has slowed hiring And it will lower its 2022 investment target by $250 million, after a drop in bitcoin prices drove the digital payments company into losses in the second quarter.
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Shares of Block, formerly called Square, fell nearly 6% in extended trading on Thursday.
The regulatory hurdles faced by cryptocurrencies, rising interest rates, and the Ukraine crisis have dampened investor appetite for riskier assets, causing the bitcoin price to drop nearly 36% in the quarter.
This sent Block’s bitcoin gross profit — or the company’s earnings when buying and selling the cryptocurrency — down 24% to $41 million.
Block facilitates bitcoin trades through its online payment service Cash App.
“While gross profit trends have been healthy during July, we recognize the importance of discipline with our investments as we enter a period of potential uncertainty,” Chief Financial Officer Amrita Ahuja said in a conference call. and investment.
Block’s most recently bought-now-pay-later unit Afterpay contributed $150 million in gross profit in the quarter, split across the company’s Square and Cash App segments. This helped Cash App post a 29% jump in gross profit.
Net loss attributable to common shareholders came in at 36 cents per share, up from a profit of 40 cents last year.
Excluding one-time items, it reported a profit of 18 cents, slightly higher than analysts’ estimates of 17 cents per share, according to Refinitiv IBES.
The fintech company is trading at a foamy valuation of about 65 times its forward earnings, compared to about 22 times on PayPal.
“Bloc’s unique approach to the market should keep them positioned as the market leader for some time, given that it has combined consumer-focused CashApp with merchant-focused Square,” said Richard Gardner, CEO of Modulus Global, A software provider for big-ticket Wall Street customers said Tuesday.