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· Posted on
February 21, 2024

Block's drops a forecast so bright that investors may need shades soon

After a rough year, Block has finally announced some positive news for investors.

What's the key learning?

  • Besides the positive news for its investors, Block is also promising to give more transparency on their future guidance.
  • Earnings transparency is the cornerstone of investor confidence.
  • As part of this update, Block committed to hitting a growth rate and profit margin that exceeds 40% combined.

👉 Background: Block (formerly known as Square) is the company behind those  little white payment terminals that you see in retailers. They're alsothe company that acquired Afterpay for $29 billion USD. Now, it's listed on both the ASX and the New York Stock Exchange.

👉 What happened: After a rough year, where its share price has halved, Block announced some positive news for investors:

  • They've cut operations costs
  • They've cut 1,200 staff
  • They're expecting to generate $430 - $450 million USD in EBITDA for the fourth quarter alone

👉 What else: On top of this, Block is promising to give more transparency on their future guidance, which means reinstating quarterly and annual gross profit guidances in their update.

What's the key learning?

💡Earnings transparency is the cornerstone of investor confidence. And hitting those forecasts are the icing on the cake.

💡As part of this update, Block committed to hitting a growth rate and profit margin that exceeds 40% combined (aka the Rule of 40). And, these ambitious targets can help investors make more informed decisions.

💡 And clearly, Block's future financial targets aligned with investor expectations. Its shares jumped 25% on the news.

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