• Block Inc reported a 7.0% decline in its fourth quarter bitcoin revenue.
• Baird analyst David Koning shares his outlook on the Block stock and keeps bullish on it.
• The company revealed a $9.0 million impairment charge related to its BTC investment in Q4 versus $2.0 million only in the prior quarter.
Block Reports Hit to BTC Revenue
Block Inc (NYSE: SQ) reported a 7.0% decline in its fourth quarter bitcoin revenue, causing a hit to its stock price. Despite this, shares of the financial technology company are up 15% year-to-date as former Twitter CEO Jack Dorsey’s firm reported overall quarterly revenue that came in slightly above the consensus.
Baird Analyst Reacts
Baird’s senior analyst David Koning reacted to the news on CNBC’s „Closing Bell: Overtime“, saying, “Bitcoin mattered when Block was at $250 a share. At $70, it doesn’t matter.“ He added that BTC generated $35 million of gross profit for Block Inc in Q4 – a 25% year-on-year decline related to the slump in bitcoin price – and is keeping bullish on Block stock despite this dip in profits.
Impairment Charge Revealed
The company revealed a $9.0 million impairment charge related to its BTC investment in Q4 versus $2.0 million only in the prior quarter, however Koning dismissed it saying that it has become immaterial compared to other sources of income for Block Inc and is not deserving of close attention from investors or analysts alike at this point time given its small percentage of total gross profits (4%).
Outlook for 2021
For the full year, Block Inc is now calling for $1.30 billion of adjusted EBITDA with an expected gross profit sitting at 25%. This marks an increase from 22% seen during their recent quarter which is indicative of positive trends seen by analysts such as Koning who are keeping bullish on Block stock ahead of 2021 despite any minor dips experienced during 2020 due to slumps in Bitcoin prices and values overall..
In conclusion, while there may be some fluctuations within Bitcoin markets over time, investors should not be overly concerned about these minor downturns but rather focus more heavily upon larger trends seen amongst companies such as Block Inc which have been able to remain profitable despite any losses sustained from their investments into Bitcoin markets throughout 2020 and beyond into 2021 based upon strong fundamentals and overall good business strategies employed by their management teams whilst also staying ahead of industry trends moving forward towards success and profitability year over year regardless of any short term losses they might experience along the way