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Is Block Stock a Once in a Generation Buying Opportunity? Yes, but only if you are bullish on this top cryptocurrency
With Square for merchants and Cash App for individuals, Block (NYSE: SQ) operates two thriving ecosystems. These two segments are leaders in their respective markets, a position that has led this business to reach a market value of US$45 billion.
Since its initial public offering in 2015, this top fintech stocks doubled the gain of Nasdaq Composite Index. However, it is currently 74% below the maximum price set in August 2021 (on May 17).
Some investors may think this makes Block a once-in-a-generation purchasing opportunity. I think this perspective has merit, but that’s only if you’re also bullish on one of the major cryptocurrencies.
Bullish on Bitcoin
In 2021, Block co-founder and CEO Jack Dorsey publicly declared his support for Bitcoin (CRYPTO:BTC), saying he would be working exclusively on this crypto if he weren’t working at the payments company or Twitter (now called X). This probably came as a shock to many.
More recently, there appears to be a renewed focus on Bitcoin. In the company’s Q1 2024 shareholder letter, Dorsey began by explaining Block’s Bitcoin strategy. It all centers on his firm belief that a world that becomes more digital will require a decentralized currency that is native to the Internet.
The company plans to design, build and sell crypto mining equipment. With Spiral and TBD, two divisions of Bitcoin, the aim is to make crypto more useful in people’s everyday lives and disrupt cross-border payments, respectively.
Block will also continue to periodically invest in Bitcoin for its own balance sheet.
Financial implications
Cash App began allowing users to trade Bitcoin in 2018. But to be clear, the company only generated $80 million of its $2.1 billion gross profit in the first quarter of 2024 by facilitating the buying and selling of Bitcoin . Block still makes most of its money from the hardware, software and financial services it offers merchants through Square, as well as the features Cash App offers customers.
But it is important to try to understand what the financial implications might be. 10 years from now, Block could essentially be leveraged for Bitcoin’s price performance, especially as it collects revenue from a potentially wide range of Bitcoin-related ventures.
What if Bitcoin doesn’t catch on like Jack Dorsey hopes? Firstly, we won’t know the answer to this question for some time yet, as many believe that we are still very early in the development of Bitcoin. However, I think Block’s core operations would still be on solid footing.
The story continues
It’s similar to watching Mark Zuckerberg, founder and CEO of Metaplatforms, invest heavily in metaverse ambitions with Reality Labs. No one has any idea if or when this will pay off. But major social media apps are still an incredibly successful segment in their own right.
No blocks without Bitcoin
Investors who saw Block as a smart way to take advantage of software and digital payments trends need to think long and hard about whether they are also bullish on Bitcoin. This requires another step in your research process.
I can see how this is a huge warning sign for some investors who want Dorsey and his team to remain focused on the primary goal of meeting the financial needs of their merchants and customers with great products and services. These critics argue that Bitcoin should be excluded from this strategy.
But on the other hand, there are clear reasons why Dorsey is positioning Block this way. Bitcoin can help Block achieve its mission of increasing financial freedom and economic empowerment. It makes sense that the fintech company is working on ways for the world’s leading digital asset to gain greater adoption.
I am bullish on Bitcoin. And I’m also optimistic about Block’s long-term trajectory. So perhaps this is indeed a once-in-a-generation investment to buy and hold for the next decade.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Neil Patel and its clients do not have a position in any of the stocks mentioned. The Motley Fool has positions on and recommends Bitcoin, Block, and Meta platforms. The motley fool has a disclosure policy.
Is Block Stock a Once in a Generation Buying Opportunity? Yes, but only if you are bullish on this top cryptocurrency was originally published by The Motley Fool