SQ

Block Inc - Ordinary Shares - Class A

Finance/Real Estate, TMT


Presented:07/19/2022
Price:$69.25
Cap:$40.20B
Current Price:$71.79
Cap:$44.20B

Presented

Date07/19/2022
Price$69.25
Market Cap$40.20B
Ent Value$73.59B
P/E RatioN/A
Book Value$30.05
Div Yield0%
Shares O/S580.50M
Ave Daily Vol18,864,257
Short Int7.75%

Current

Price$71.79
Market Cap$44.20B
Block, Inc. is a global technology company that focuses on financial services. The company operates through the following products: Square, Cash App, TIDAL, Spiral and TBD54566975. Square helps sellers run and grow their businesses with its integrated ecosystem of commerce solutions, business software, and banking services. Cash App allows users to send, spend, or invest money in stocks or Bitcoin. Spiral (formerly Square Crypto) builds and funds free, open-source projects that advance the use of Bitcoin as a tool for economic empowerment. Artists use TIDAL to help them succeed as entrepreneurs and connect more with fans. TBD54566975 builds an open developer platform to make it easier to access Bitcoin and other blockchain technologies without having to go through an institution. The company was founded by Jack Patrick Dorsey, and Jim McKelvey in February 2009 and is headquartered in San Francisco, CA.

Publicly traded companies mentioned herein: Affirm Holdings Inc (AFRM), Block Inc (SQ), Coinbase Global Inc (COIN), Marqeta Inc (MQ)

Highlights

The presenter is long shares of Block Inc (SQ), which he has been buying in the low-$60s and currently trades in the mid- to high-$60 range. It is still early on in a potential recessionary environment and there will likely be a significant macroeconomic impact to numbers. However, at the beaten down stock price, his analysis centers around the performance of SQ’s seller business in a recession and what the seller business is worth by itself on recessionary numbers. He models ~$3B of gross profits for the seller business in a recession and uses that figure to reach a valuation of $47 – $50 per share for this business unit that represents roughly half of total gross profits. At a cost basis in the low-$60 range, he is receiving Cash App and Afterpay for free, as well as a call option on the recession being less severe than his assumptions. Taking a longer view, he sees 18-month upside to $150 per share for the entire business. 

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Idea Discussion

Commentor 1 - 2 weeks ago

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