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Block Inc shares drop 12% after Q3 revenue miss

Block Inc shares drop 12% after Q3 revenue miss

GrafaGrafa2024/11/08 04:00
By:Mahathir Bayena

Block Inc’s (SQ) shares dropped by 12.3% in after-hours trading following the release of its third-quarter financial report, which showed revenue falling short of Wall Street expectations.

The company posted $5.98 billion in total revenue, a 6.4% increase compared to the same period last year, but below the $6.17 billion forecast by analysts.

Bitcoin (CRYPTO:BTC) revenue, a significant part of Block’s earnings derived from transaction fees, remained stagnant at approximately $2.43 billion, matching Q3 2023 levels.

The company’s report indicated that despite the revenue miss, gross profits rose 19% year-on-year to $2.25 billion, with net income reported at $283.7 million, aligning with market projections.

Block also announced a strategic shift, deciding to “wind down” its decentralised finance software business, TBD, and scale back its investment in TIDAL, its music streaming service.

This move is intended to reallocate funds toward expanding its Bitcoin-focused initiatives, including its mining project and Bitkey, a self-custody wallet for Bitcoin.

“This gives us room to invest in our Bitcoin mining initiative, which has strong product market fit and a healthy pipeline of demand,” Block stated in a shareholder letter.

The company’s revenue challenges occurred as Bitcoin prices remained relatively stable, averaging around $60,000 throughout the third quarter, which spanned from July to September.

However, Bitcoin’s price has since climbed, reaching a new peak just shy of $77,000 on November 7, based on TradingView data.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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