Block: A Quick Recovery, Now At A Crossroads (Maintain Strong Buy)

Summary

• Block's post-earnings selloff was overdone - recent product launches and its bitcoin business justify the stock's rapid recovery.
• Square's new biannual product launch cadence, the first of which included Square Handheld and a Square AI teaser, positions the company to reignite Square segment growth.
• AI integration into Square POS leverages proprietary data and distribution, offering robust upselling potential and should drive strong future subscription and services revenue.
• Block is among the best bitcoin businesses available on public markets, with a full-stack approach and the ability to deploy bitcoin services into enormous ecosystems of merchants and consumers. Further, the company earns a very lucrative yield on its Lightning channel, which is seeing booming growth.
• Block is at a crossroads; it has faced several years of multiple compression and poor stock performance, but recently has inflected EPS and is looking to re-accelerate Square and Cash App growth. Now, execution is everything.

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Just a few short weeks ago, I wrote one of the most uncomfortable articles in my time writing here for Seeking Alpha. Jack Dorsey's Block (NYSE:XYZ) reported objectively bad earnings, with slowing growth and meager guidance. The stock got decimated. It dropped

Analyst’s Disclosure:I/we have a beneficial long position in the shares of XYZ, BTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.