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Block [ASX:SQ2] Share price: publication of March quarter results

Block [ASX:SQ2]formerly known as Square, released its March quarter to the ASX on Friday, signaling a loss of earnings on a red day for stocks around the world.

SQ2 shares, which now also trade on the ASX following Block’s seminal acquisition of BNPL Afterpay last year, were trading down 2% in afternoon trading on the Australian exchange.

Year-to-date, SQ2 shares are down 20%:

Source: Tradingview.com

SQ2 quarterly results

Block’s results were somewhat mixed.

RBC Capital Markets analyst Daniel Perlin, for example, said the fintech’s quarterly net revenue, gross profit and EBITDA all beat expectations.

But sales across the system were below expectations.

Block reported gross profit of $1.29 billion for the March quarter, a 34% year-over-year increase.

The company’s Cash app saw a 26% year-over-year increase, totaling $624 million for the quarter.

The Cash app recorded the highest quarterly inflows ever in the March quarter.

Revenue based on subscriptions and services was $960 million, up 72% year-over-year, with gross profit based on subscriptions and services up 63%, for a total of $764 million.

However, the increase in gross profits was not enough to offset other expenses.

Block ended the March quarter with a net loss of $204.2 million, down from net profit of $39 million in the prior corresponding period.

Operating expenses totaled $1.52 billion in the first quarter of 2022, up 70% year-over-year.

Operating cost SQ2

Source: SQ2

SQ2 share price: Tech stocks fall as markets worry about inflation

Friday was a big red day for equity markets as nervous investors continue to ponder recent central bank decisions.

Technology stocks were the hardest hit.

Overnight, the tech-heavy U.S. Nasdaq index fell 5%.

And the Dow Jones Industrial Average recorded its biggest drop this year 24 hours after its biggest rise since 2020.

With bond yields soaring in recent weeks due to hawkish central bank policies, cash-intensive growth stocks are under pressure.

Including block.

Its acquisition of Afterpay – a BNPL stock that has yet to make a profit and requires a lot of capital to fund its receivables – is not helping to manage this cash burn.

As noted by Andrew Bauch of SMBC Nikko Securities America:

SQ appears to be in the crosshairs of cyclical sensitivity within the seller merchant base and outsized exposure to “low-end consumers” who many predict will be the first cohort to rein in discretionary spending amid a downturn.’

We are entering a period of great volatility for equities at the moment.

It looks like we’ve entered an era where investors lack the conviction to hold’a position for any duration“said Christopher Sullivan, Chief Investment Officer at United Nations Credit Union.

But such moments can provide opportunity.

There’s a bit of a cycle when it comes to buying and selling stocks on the ASX – sometimes when it looks like stocks are out of fashion – it could be a good time to hunt good deals.

But you have to know what you are looking for, and follow a certain strategy…

Our expert Callum Newman used the “Sam Zell strategy” and found three left-for-dead stocks that could spring to life and soar.

Click here to learn more about the three ‘grave-dancer’ stocks.

Cheers,

Kiryll Prakapenka,

For silver morning