5. Block Inc. (NYSE:SQ)
Forward P/E: 14.41
Earnings Growth: 98.90%
Analysts’ Upside Potential: 34.29%
Number of Hedge Fund Holders: 59
Block Inc. (NYSE:SQ), formerly known as Square, is a global technology company with a focus on financial services and significant involvement in the cryptocurrency space. The company changed its name in 2021 to reflect its growing focus on crypto and blockchain technologies.
The company provides a range of products and services. Its flagship product, Square, helps businesses manage payments and operations through an integrated ecosystem of commerce solutions. Cash App allows users to send, spend, and invest money in stocks or Bitcoin. Block Inc. (NYSE:SQ) supports the blockchain industry through its subsidiary TBD, which focuses on creating an open platform for accessing Bitcoin and other blockchain technologies. Through Spiral, the company also builds free, open-source projects that advance the use of Bitcoin to enhance economic empowerment, further solidifying its commitment to the blockchain space.
The company’s business model caters to various customer needs, from small businesses to individual users, creating multiple revenue streams. On top of that, Block Inc. (NYSE:SQ) continues to explore new ways to innovate within the cryptocurrency space.
On July 10, Block Inc. announced a significant partnership with Core Scientific, one of the largest Bitcoin miners in North America, to supply advanced 3-nanometer (3nm) mining ASICs, which will enhance Bitcoin mining operations. The ASIC mining chip was built by the Proto team at Block. By integrating these new ASIC chips into Core Scientific’s infrastructure, the collaboration aims to decentralize Bitcoin mining and promote innovation within the sector, aligning with Block’s mission to democratize access to Bitcoin mining technology. The Proto team is developing a modular mining platform designed to improve efficiency, reliability, and sustainability in large-scale mining operations. Block Inc. (NYSE:SQ) could become a major player in the cryptocurrency mining sector.
In the second quarter of 2024, Block Inc. (NYSE:SQ) reported impressive financial results, with gross profit reaching $2.23 billion, a 20% increase year-over-year. Square generated $923 million in gross profit, up 15% year-over-year, while Cash App saw a more substantial increase of 23%, reaching $1.30 billion. This performance demonstrates the strength of Block’s diverse business model and its ability to adapt to market demands, particularly through Cash App, which has been a key driver of revenue.
The company’s profitability metrics also showed remarkable improvement in the second quarter. Operating income was reported at $307 million, with Adjusted Operating Income reaching $399 million. Notably, Adjusted EBITDA nearly doubled year-over-year to $759 million, reflecting a significant increase in efficiency and effective cost management. For the fiscal year ending in June, Block Inc. (NYSE:SQ) achieved an adjusted free cash flow of $1.43 billion, more than double that of the previous year, indicating strong cash generation capabilities.
Block Inc. (NYSE:SQ) is trading at only 14 times its forward earnings. Analysts are also bullish on SQ. The 12-month median price target set by analysts indicates a potential upside of 34.29% from current levels.
By the end of the second quarter of 2024, Block Inc. (NYSE:SQ) was held by 59 hedge funds. ARK Investment Management emerged as the largest shareholder, with a stake valued at $534.78 million. SQ ranks among the top 5 on our list of the most undervalued blockchain stocks to buy according to analysts.
