Block The actions were on the way to their second day of sausage on Friday, lunch more than 20%, since it invested a brutal quarterly report and a wave of analyst sales focused our problem: the application in cash.
The profits of the first quarter were missing Miss Wall Street, which caused multiple companies, including companies, Wells Fargo, Seort, BMO and Benchmark-to degrade the actions during the night. Many marked concerns about the growth of the users of the application of stagnant cash, the controlled consumer demand and a soft macro environment that can weigh on the monetization.
“The stagnation in the number of active users of the application is equally more worrying than the reduced spending of users,” Benchmark wrote in his note, degrading the block to maintain.
The Financial Services Company was lost in the revenues of the Board, the gross profits and the volume of payments, and reduced its orientation of the whole year, citing the macro uncertainty, the expense of the consumer of Waker and the influx of lower hope.
“I simply do not think we were concentrated enough and that we have enough attention in the network and the density of the network, and that is our base,” said Jack DORSEy CEO on the gain call. “We or course because to deepen the commitment to our clients through banking services and loans, and I have no doubt that we will do it … but at the same time, we must ensure that our network continually grows, and that they begin with Pear to Pear Pear.”
The cash application generated $ 1.38 billion in gross profits in the first quarter, 10% more than the previous year, but less than the consensus of the street account of $ 1.42 billion. Monthly assets remained stable with 57 million tickets and increased only 8%, despite the new features such as after the cash card and the broader efforts to position the application of cash as a complete bank alternative.
5 -day block graphic in block
Wells Fargo called “numerous red monetization flags of cash applications”, while Seort pointed out several consecutive quarters or negative GPV growth. Even Morgan Stanley, who reiterated his overweight qualification, called the Miss “surprising” cash application, although he highlighted a better impulse than expected in the business of square vendors in international markets.
BMO degraded market performance actions. Wells Fargo He said he is not willing to “go to bed for the second half of Hil Mary”, moving equally. Seport degraded Neutral, writing: “Will the true Jack Dorsy stand up?”
Even so, some maintained optimism, with Bank of America Reiterate your purchase rating, call undervalued shares and Morgan Stanley To say that it was an attractive short -term entry point.
The block response plan depends on loans. The company says that the loan of cash applications, now approved by the Federal Deposit Insurance Corp. to cause loans through its bank subsidiary, twice as much eligible users and improve the margins by bringing internal service.
Marketing spending is also expected to jump 50% in the second quarter, since Block seeks rearcery growth in the middle of the year.
“We are not sure enough in the probability of such rebound to recommend buying the stock in weakness,” Benchmark.
Meanwhile, the venmo rival shows signs of impulse.
Parent company PayPal He reported a 20% income leap for the application in the first quarter, driven by a greater adoption of the avemo debit card, instant transfers and the growing volume at the end of the purchase. Although PayPal did not reveal an exact income figure for venmo, he said that monetization per user is improving: the result of a clear impulse to embed venmo more deeply in electronic commerce flows.
Now two very different strategies are being developed: the cash application leans more deeply in loans and banking, while Venmo is chasing the expense at the time of paying. But the goal, however, is the same: to own the consumer wallet.
At this time, Venmo seems to be gaining ground, while the cash application regroups.
