Ark Invest Stock Portfolio: Top 10 Picks

4. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Investors  in Q1 2024: 65

Ark Investment Management’s Q2 2024 Stake: $534 million

Block, Inc. (NYSE:SQ) is a software and hardware company that provides financial payments management software along with payment processing hardware. Since its performance depends on transaction volume, Block, Inc. (NYSE:SQ)’s shares are also dependent on the state of the economy and consumer and business spending. Consequently, the shares gained 23% in 2023 as the economic outlook continued to improve, Block, Inc. (NYSE:SQ) reported robust spending volumes, and investor worries about a recession continued to dissipate. Additionally, the software heavy nature of its business means that the firm also depends on cost control which hinges on becoming a Rule of 40 firm. On this front, Block, Inc. (NYSE:SQ) hopes to achieve this status by the end of FY2026. In short, economic conditions, transaction volume, product innovation, and cost control are the four pillars of Block, Inc. (NYSE:SQ)’s hypothesis.

Block, Inc. (NYSE:SQ)’s management also shared key details for its volume expectations for the remainder of 2024 during the Q1 2024 earnings call:

“In the back half of the year, we expect GPV growth to be stable to improving behind more favorable same-store growth comparisons with a narrowing delta between gross profit and GPV growth rates. We continue to focus on initiatives that improve our product velocity. These include several upcoming launches that further our strategies for Cash App and Square, most notably testing and rolling out Afterpay on Cash App Card. And for Square, completing the orders migration this summer and conversion to a single app by year-end. These initiatives remain on track, and we expect them to benefit our growth into 2025 and beyond. For profitability in 2024, we are now expecting at least $1.3 billion in adjusted operating income or 15% margins on gross profit.”