• Block Inc. reported a 7% decline in its fourth quarter bitcoin revenue.
• Baird’s analyst David Koning said that Bitcoin doesn’t matter much at the current stock price of $70.
• The company reported a 25% year-on-year decline related to the slump in bitcoin price and a $9 million impairment charge in Q4.
Block Reports Hit to BTC Revenue
Block Inc (NYSE: SQ) reported a 7.0% decline in its fourth quarter bitcoin revenue, with a 25% year-on-year decline related to the slump in bitcoin price. The San Francisco-based financial technology multinational also revealed a $9 million impairment charge related to its BTC investment in Q4 versus $2 million only from the prior quarter.
Baird Analyst’s Outlook on Stock
David Koning, senior analyst at Baird, shared his outlook on Block stock with CNBC’s „Closing Bell: Overtime“. He said that Bitcoin mattered when Block was at $250 per share, but at the current stock price of $70 it doesn’t matter much as it accounts for 4% of gross profit. He added that Block’s Cash App crushed expectations and January and February trends have been accelerating nicely despite Street’s modelling deceleration for Q1. His price target of $85 per share suggests about 15% upside on where this stock closed today.
Full Year Forecast
For the full year, Block Inc is now calling for $1.30 billion adjusted EBITDA and a gross profit forecast of 25%, which is up from 22% from the recent quarter. Shares of Block are trading up today despite posting lower than expected results due to former Twitter CEO Jack Dorsey’s firm reporting overall quarterly revenue slightly above consensus estimates.
Impacts on Cryptocurrency Market
The overall hit to bitcoin revenue could be seen as an indicator for how cryptocurrencies will be performing over the next few quarters – if prices remain low or continue to drop then companies may start taking further impairments charges as they adjust their portfolios accordingly..
This could have potential implications on cryptocurrency markets as investors may become wary of investing right now due to concerns around further losses which could drive down prices even further if enough investors decide to sell off their holdings over time..
Overall, while Block appears to still be doing well despite the hit to its bitcoin revenue, there is still some uncertainty surrounding cryptocurrency markets given their volatility and potential impacts it may have on future earnings reports released by other companies dealing in digital assets. Investors should keep an eye out for any further news regarding these issues before making any decisions about investing or selling off their holdings until more clarity has been established around this topic going forward