Block Stock Drops Despite Strong Gross Profit, Bitcoin Revenue Stalls
Block Stock– Block Inc.’s shares saw a sharp decline in after-hours trading on November 7, following the release of its third-quarter earnings report. The company’s Bitcoin revenue remained flat, and total revenue fell short of Wall Street’s expectations. Block’s stock dropped 12.3% to $66 shortly after the market closed, though it later recovered slightly to a 1.7% loss. Despite this, the stock is up 4.2% year-to-date.
Q3 Earnings Miss Expectations
Block reported third-quarter revenue of $5.98 billion, a 6.4% increase compared to the previous year, but it fell short of analysts’ expectations of $6.17 billion. The company’s Bitcoin-related revenue, which is the main contributor to its profits, showed no growth year-over-year, staying at around $2.43 billion. This stagnation in Bitcoin revenue came as the cryptocurrency traded relatively flat throughout the quarter.
Investing in Bitcoin Mining and Crypto Services
In an effort to bolster its cryptocurrency-related services, Block announced plans to scale back its decentralized finance (DeFi) platform TBD and its investment in music streaming service TIDAL. Block aims to focus more resources on Bitcoin mining and its self-custody wallet, Bitkey, which are expected to have strong demand. The company sees these initiatives as key to its future growth, as stated in a shareholder letter: This gives us room to invest in our Bitcoin mining initiative, which has strong product market fit and a healthy pipeline of demand.
Q3 Profit and Future Outlook
Despite missing revenue targets, Block did see positive growth in other areas. The company reported a 19% increase in quarterly gross profit to $2.25 billion, with a net income of $283.7 million—matching analysts’ estimates. As Bitcoin prices hovered around $60,000 during Q3, Block’s outlook was impacted, but the cryptocurrency’s price has since surged, reaching new highs near $77,000 on November 7.
Block’s focus on Bitcoin services and mining positions it for future growth, but the flat revenue from crypto operations in Q3 raised concerns among investors.
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