Square and Cash App Revenue Drive Block's Fourth-Quarter Gross Profit Growth

Unique Points

• Square-parent Block (SQ) reported fourth-quarter earnings that missed estimates while revenue slightly beat as other financial metrics were mixed.
• Block stock closed up 16% on Friday
• $2.03 billion in gross profit — a gain of 22% year-over-year — and its full-year EBITDA guidance.
• The company has been focusing on international for about four to five years but believes it has been margin dilutive.

Accuracy

• The payments company reported fourth-quarter earnings that beat analysts' estimates on gross profit and showed strong growth in its Square and Cash App revenue
• $2.03 billion in gross profit, up 22% from a year ago

Deception (50%)

• The statement that Square-parent Block (SQ) reported fourth-quarter earnings that missed estimates while revenue slightly beat as other financial metrics were mixed is misleading because it implies that SQ's earnings are lower than expected when in fact they are higher than projected by analysts.
• Oppenheimer analyst Dominick Gabriele stated that Square forecast gross profit of at least $8.65 billion versus consensus at $8.55 billion and expects adjusted EBITDA of at least $2.65 billion versus consensus at $2.4 billion for 2024, implying a significant margin expansion which is likely the main driver of SQ stock's rally in price after the earnings report was released.

Fallacies (75%)

Bias (85%)

• The author uses language that dehumanizes white supremacists by referring to them as 'verified accounts on X' and major far-right influencers on platforms like Telegram who are celebrating. This is an example of religious bias as it implies a moral judgment against these groups based on their beliefs.
• The author uses language that demonizes white supremacists by referring to them as 'dog-whistling' and supporting extremist far-right ideologies like QAnon. This is an example of political bias as it implies a particular viewpoint or stance against these groups based on their beliefs.

Site Conflicts Of Interest (100%)

None Found At Time Of Publication

Author Conflicts Of Interest (50%)

• The author mentions their investment in Block (SQ) which is Square's parent company.

Unique Points

• Block stock closed up 16% on Friday
• The payments company reported fourth-quarter earnings that beat analysts' estimates on gross profit and showed strong growth in its Square and Cash App revenue
• $2.03 billion in gross profit, up 22% from a year ago

Accuracy

No Contradictions at Time Of Publication

Deception (50%)

• The title implies that the shares have surged by 16% after a surprise profit announcement when in fact it was only up by 4 cents per share and not comparable to estimates.
• Dorsey says 'We believe this strategy will enable us to build the largest network in the long run,' but fails to mention that Dorsey has also laid off thousands of employees recently.
• While Block's Cash App business reported strong growth, it is not mentioned that Afterpay, a company acquired by Block for $29 billion last year, struggled throughout 2021 and posted successive quarters of losses.

Fallacies (80%)

• The author uses inflammatory rhetoric when describing the company's focus on driving profitable growth and its plans to integrate Afterpay more tightly into Cash App.

Bias (80%)

• Block stock closed up 16% Friday
• The company raised its adjusted EBITDA forecast to at least $2.63 billion from $2.40 billion
• The payments firm has focused on slimming down operations in recent months. In January, the Block CEO reportedly said in a note to staffers that the company had laid off a "large number" of workers.
• 'We believe this strategy will enable us to build the largest network in the long run, with a highly engaged customer base using Cash App as their primary banking solution,' Dorsey said in a note to shareholders.

Site Conflicts Of Interest (50%)

• MacKenzie Sigalos reports on Block's earnings per share (EPS) as $5.77 billion vs $5.70 billion expected, which is a positive outcome for the company.

Author Conflicts Of Interest (50%)

• The article mentions that Block shares surge 16% after company announces surprise profit and gross profit for Cash App business
• The article states that the gross profit of Cash App Card has 23 million monthly actives, which is a product offered by Square Inc.

Unique Points

• Block historically decided that it wanted to move from SMB (Small and Mid-sized Business) to the mid-market. You need a different sales strategy, you need a different product mix.
• The company has been focusing on international for about four to five years but believes it has been margin dilutive. They have started disposing of unprofitable businesses such as Tidal.

Accuracy

• Square expects to cap its workforce size at 12,000 and plans to deprioritize international expansion of CashApp.

Deception (100%)

None Found At Time Of Publication

Fallacies (85%)

• >

Bias (85%)

• Block historically built its own products but now plans to partner with independent software vendors (ISVs)
• Block's merchant business seems to have slowed down materially
• The Cash App service is driving growth for the company

Site Conflicts Of Interest (50%)

Author Conflicts Of Interest (50%)

• Wedbush Securities Managing Director, Equity Research — IT Services & Payments is an employee of the company and therefore has a vested interest in their success.

Unique Points

• Block Inc. shares showed a sharp rally in afternoon trading Friday and would log its best day in over 15 months if current gains carried through to the close.
• The payment-technology company posted a 28% margin on adjusted EBITDA up from a year earlier.
• Seaport Research analyst Jeff Cantwell turned bullish on Block Inc.'s stock after its Thursday afternoon earnings report and lifted his price target to buy from neutral.

Accuracy

No Contradictions at Time Of Publication

Deception (50%)

• The author uses quotes from analysts to support their claims about Block's performance without disclosing any potential conflicts of interest or biases they may have. This is an example of selective reporting.
• The title implies that Block's stock has had a significant increase in value when it only increased by nearly 20% and not its best day in over two years as stated. This is an example of deceptive reporting.

Fallacies (85%)

• The author uses an appeal to authority by citing the opinions of multiple analysts without providing any evidence or reasoning for their conclusions.
• The author commits a false dilemma by presenting only two options: either Block's stock is performing well due to its efficiency and focus on driving profitable growth, or it is not performing well because of macroeconomic factors.

Bias (85%)

• Block posted a 28% margin on adjusted Ebitda up 1,100 basis points from a year before
• Block’s stock SQ, +16.13% was ahead nearly 20% in afternoon trading Friday and would log its best day in over 15 months if current gains carried through to the close.
• He has an outperform rating on the stock, and she upped her target price to $90 from $85 in a Friday report.
• He turned bullish on Block’s stock after its Thursday afternoon earnings report, cheering management’s “excellence in execution” and the company’s “compelling margin expansion.
• Judging by the sharp rally in Block Inc. shares
• The company's progress over the past several months has been impressive

Site Conflicts Of Interest (50%)

Author Conflicts Of Interest (50%)

Unique Points

• Block saw total customer sales of $2.52 billion worth of bitcoin in Q4, up 37% YoY
• $66 million gross profit from Cash App's sale of bitcoin marks a 90% year-on-year growth

Accuracy

• The company gained $207 million in remeasured bitcoin holdings

Deception (50%)

• The article states that Block held around 8,038 bitcoin at the end of last year, which was worth around $340 million at the time. However this is not true as it does not disclose how many bitcoins were sold in Q4 and what their value was.
• The title claims that Block saw total customer sales of $2.52 billion worth of bitcoin in Q4, up 37% YoY when it actually only recorded $2.52 billion in the total bitcoin sales amount to customers in the fourth quarter of 2023 which grew 37% year-on-year.

Fallacies (85%)

• The author uses an appeal to authority by stating that Block's earnings report shows the company gained $207 million in remeasured bitcoin holdings and made a gross profit of $2.5 billion from total customer sales of bitcoin, without providing any evidence or context for these claims.
• The author uses inflammatory rhetoric by stating that Block's mobile payment platform Cash App profited $66 million by selling bitcoin in the fourth quarter, which is a 90% growth year-over-year. This statement creates an emotional response without providing any evidence or context for this claim.

Bias (85%)

• Block held around 8,038 bitcoin at the end of last year, which was worth around $340 million at the time.
• > Jack Dorsey's Block saw total customer sales of $2.52 billion worth of bitcoin in Q4, up 37% YoY
• < The company gained $207 million in remeasured bitcoin holdings. Block as a whole generated $2.03 billion in gross profits in the fourth quarter, marking a 22% year-over-year increase.

Site Conflicts Of Interest (50%)

• $66 million in gross profits via sales of bitcoin, marking a 90% year-on-year growth.

Author Conflicts Of Interest (50%)

• The article mentions Cash App's mobile payment platform
• The author mentions Square's financial services platform for small to medium sized companies