Block stock price popped by over 5% in the extended hours after publishing strong financial results. XYZ shares jumped to $81, a few points below the highest point this year. At its peak, it was up by over 80% from its lowest point this year.
Block Business is Booming
In a statement, Block, formerly known as Square, said that its business continued growing in the second quarter. Total gross profit jumped by 14% to $2.54 billion, helped by its merchant and Cash App businesses.
Cash App’s gross profit rose by 16% to $1.5 billion, while Square made $1.03 billion. The management then boosted its full-year gross profit guidance, expecting the figure to come in at $10.15 billion, up 14.4% from the previous year.
Block has expanded its business over time, with Cash App being one of its core platform. Over $218 billion in peer-to-peer payments moved through the network, while the commerce solutions had a transaction volume of $183 billion.
Cash App has over 57 million user, with 8 million of them using its banking functionality. It is also a major player in the crypto industry, with its cumulative Bitcoin volume jumping to over $58 billion.
Block is also a major player in the booming Buy Now, Pay Later industry, which it entered through its acquisition of AfterPay. AfterPay is now part of CashApp’s platform and was a major contributor to its gross profit growth. Jack Dorsey, the CEO, said:
“Cash App is building the financial operating system for the next generation. We want everyone to be able to run their financial lives on Cash App, and we are already seeing this happen at scale, especially with younger customers.”
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While Block had a strong quarter, it faces major challenges. For one, it is no longer the growth company it was a few years ago. Analysts see its annual revenue growing by 4% to $25.13 billion this year.
Additionally, in the future, the company’s business is likely to be disrupted by stablecoins, which many retailers are adopting due to their low transaction costs and fast speeds.
Square today charges its merchants a 2.6% in transaction fee, a figure that is too much to many customers. Many customers are now working on ways to implement stablecoins in their operations.
Block Stock Price Technical Analysis
The daily timeframe shows that the XYZ stock price has been in a strong bull run in the past few months. It jumped from a low of $44 in May to $81 today.
The stock formed a golden cross pattern on July 28 as the 50-day and 200-day Exponential Moving Averages crossed each other. It has also moved above the 61.8% Fibonacci Retracement level.
Block stock price has formed a series of higher highs and higher lows. Therefore, it will likely continue rising as bulls target the key resistance point at $87.5, the 78.6% retracement level. A move above that level will point to more gains to $90.
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