Block Inc (NYSE: SQ) enables sellers to accept card payments and also provides reporting and analytics, and next-day settlement. The company’s point-of-sale software and other business services help sellers manage inventory, locations, and employees; access financing; engage buyers; build a website or online store; and grow sales

Key Updates:

• SQ announced its third-quarter results, wherein the company posted its total revenue of USD 3,844.727 million, surged from USD 3,033.874 million in pcp. The growth was primarily driven by higher income from transaction-based segment and subscription and services-based revenue.
• The quarter was marked by higher cost of revenue coupled with a rise in sales & marketing expense.
• The company reported a net loss of USD 2.876 million, as compared to a net profit of USD 36.515 million in pcp.
• Cash from operations stood higher at USD 672.776 million in 9MFY21, as compared to USD 260.887 million in pcp.
• The company reported its quick ratio and current ratio of 1.89x and 1.90x, respectively, as compared to the industry median of 1.52x and 1.59x, respectively. A higher ratio suggests improved liquidity.

Q3FY21 Income Statement Highlights (Source: Company Report) 

Valuation Methodology (Illustrative): Price to Earnings based

Analysis By Kaline Group

Stock Recommendation:

The stock of SQ has closed below its crucial support levels of 50-days and 100-days simple moving averages (SMA), indicating a bearish pattern. We have valued the stock using price to earnings relative valuation basis, and considered peers like Mastercard Inc, Intuit Inc etc. and arrived at a higher double-digit downside in percentage terms. Hence, we give an ‘Expensive’ rating on the stock of SQ at the last traded price of USD 133.29 on January 14, 2022.

Technical Price Chart (as of January 14, 2022). Analysis by Kalkine

*The reference data in this report has been partly sourced from REFINITIV.