Block Boosts Bitcoin Holdings, Upgrades Earnings Target

Building on the success of Bitcoin exchange-traded funds (ETFs) approved by the SEC, Block CEO Jack Dorsey has announced plans to invest in the cryptocurrency. The company aims to allocate 10% of its gross profit from Bitcoin products towards purchasing the asset. Block also raised its adjusted core earnings forecast for the year to at least $2.76 billion, exceeding its previous estimate.

Block Boosts Bitcoin Investment, Raises Earnings Forecast

New York, April 28, 2023 - Block, Inc., the financial technology firm led by former Twitter CEO Jack Dorsey, has announced a significant expansion of its investment in Bitcoin, as well as an upward revision of its full-year adjusted core earnings forecast.

Bitcoin Expansion

In a letter to shareholders, Dorsey outlined Block's plans to allocate 10% of its gross profit from Bitcoin-related products into purchasing the cryptocurrency on a monthly basis. This move underscores the company's commitment to the asset class and its belief in its long-term potential.

"We believe the world needs an open protocol for money, one that's not owned or controlled by any single entity," Dorsey stated.

Currently, Block dedicates less than 3% of its resources to Bitcoin-related initiatives, indicating ample room for further growth in this area. The company's decision to increase its Bitcoin exposure aligns with the recent mainstreaming of the digital currency, particularly following the approval of several Bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) earlier this year.

Earnings Forecast Revised Upward

Concurrently, Block reported a strong financial performance for the first quarter of 2023, leading to an upward revision of its full-year adjusted core earnings forecast. The company now expects annual adjusted core earnings to reach at least $2.76 billion, exceeding its previous projection of $2.63 billion.

Block's financial resilience stems from the ongoing strength in consumer spending, fueled by a tight labor market and wage growth. Americans have been prioritizing travel, shopping, and dining out, despite concerns about an economic slowdown.

Strong Payment Sector

Block's positive earnings results contribute to a broader trend of strong performance within the payments sector. Key rivals, such as PayPal, have also recently reported robust financial results, reflecting the resilience of consumer spending.

Block's total net revenue surged by 19% to $5.96 billion in the first quarter, surpassing analyst expectations. On an adjusted basis, the company earned 85 cents per share in the three months ended March 31, topping consensus estimates of 72 cents per share.

Stock Performance

Despite its strong financial performance, Block's stock has underperformed its peer, PayPal, year-to-date. As of its last close, Block's shares have declined by 9.1%, while PayPal's have appreciated by 9%.

Conclusion

Block's decision to expand its Bitcoin investment and raise its earnings forecast reflects the company's optimism regarding the cryptocurrency's future and the resilience of the payments sector. As the mainstream adoption of Bitcoin continues to accelerate, Block is well-positioned to capitalize on the growing demand for digital assets and the evolving financial landscape.