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Block Inc Surpasses Earnings Expectations With 8,027 Bitcoin Holdings, Now Jack Dorsey Wants More 

Published May 3, 2024 10:01 AM
Shraddha Sharma
Published May 3, 2024 10:01 AM

Key Takeaways

  • Block, formerly Square, outperformed analyst predictions in Q1 2024 earnings report.
  •  Gross profit surged to $2.09b, up by 22% from the 2023.
  • Block’s bitcoin holdings stand at 8,027 BTC, representing around 9% of its total cash.

Block Inc, led by Twitter co-founder Jack Dorsey, has surpassed earnings expectations in Q1 2024 report. The company witnessed a surge in gross profit and net income soon after the allegations of US law violations. Block is also strategizing to invest in Bitcoin as it already holds  8,027 BTC. 

Block’s Earnings Report in Q1

Block reported strong financial results for the first quarter of 2024. Gross profit reached $2.09b, marking a 22% increase from 2023. 

Block’s adjusted earnings per share was 85 cents, and revenue totaled $5.96b. Net income soared to $472m, a substantial increase from $98.3m reported in the previous year. The company also raised its adjusted EBITDA forecast for the second quarter. It came to $690m from $670m, indicating confidence in its future trajectory.

Interestingly, the stellar earnings come right after the company was reported to have processed transactions that violate US sanctions. Media reports claim that federal regulators are probing Block. 

During the earnings call, Dorsey said , “First, we do not believe that there is any new investigation into Block, but rather that these reports relate to the existing inquiry by the DOJ that we’ve previously disclosed.”

Dorsey further adds that there was critical information omitted from the article. 

Block’s Bitcoin Holdings

Block holds 8,027 BTC on its balance sheet. The holdings represent about 9% of the company’s total cash, cash equivalents, and marketable securities. Since its initial investment in Bitcoin, Block has benefited from its long-term strategy.

Since first reporting  their Bitcoin balance on October 7, 2020, the company has observed a 460% price rise in US dollar terms.  However, their stock price has decreased by 58.6% in the same period, and when compared to Bitcoin’s value, the stock price has decreased by 92.6%. 

This indicates that while Bitcoin has greatly increased in value, the company’s stock has not only declined in USD terms but has also drastically underperformed in comparison to Bitcoin as per analysis  by Bitcoin Treasuries. 

In the shareholder letter, Block elucidates its rationale behind the focus on Bitcoin. Despite dedicating less than 3% of its resources to Bitcoin-related projects, the company emphasizes the importance of Bitcoin as an open protocol for money, advocating for its potential to become the native currency of the internet. Block views Bitcoin as a catalyst for global financial inclusivity, enabling the company to serve a broader audience without the need for extensive customization across various payment schemes.

This includes the Cash App, which allows customers to buy and sell Bitcoin, as well as hardware projects focused on enhancing Bitcoin security and accessibility. 

What is The Next Bitcoin Investment?

Block’s earnings release laid down a BTC purchase strategy. Starting on October 7, 2020, Block initiated its Bitcoin holdings by purchasing 4,709 Bitcoins for $50 million, at a rate of approximately $10,618 per Bitcoin. They expanded their holdings in February 2021 with an additional purchase of 3,318 Bitcoins for $170 million, priced at $51,236 per Bitcoin.

Block follows a strategic investment approach to Bitcoin, employing dollar-cost averaging (DCA) to mitigate market volatility risks. Under the DCA program, the company plans to invest 10% of its monthly gross profit from Bitcoin products into Bitcoin purchases, executed through time-weighted average price (TWAP) orders every month.

In a strategic shift from making lump-sum purchases, Block has now introduced a Dollar Cost Averaging (DCA) strategy into their investment approach, allocating 10% of their monthly gross profit from Bitcoin-related products to buy  Bitcoin. This method starts in April 2024, with purchases over each month, aiming to enhance liquidity and reduce transaction costs. The systematic investment plan is designed to build their Bitcoin holdings regularly while mitigating price risks. 

Block Puts Weight on BTC 

Block Inc.’s impressive first-quarter earnings report underscores its strong performance and strategic focus on Bitcoin. 

With a solid plan to allocate 10% of monthly gross profits from Bitcoin-related products into Bitcoin investments through a Dollar Cost Averaging strategy, Block is positioning itself to mitigate market volatility while capitalizing on the growth potential of cryptocurrencies. This approach, combined with strong earnings and a focus on expanding its Bitcoin ecosystem, sets Block up for sustained growth and a leading role in the digital finance under Jack Dorsey’s leadership.

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