Block (formerly Square) is making an unusually quiet entry to the ASX. It’s big slide since its Afterpay takeover raises questions about its outlook.
It may have a market valuation of more than $80 billion, but there’s an unusually eerie sense of quiet around theIn fact, one of the few sounds investors might have been able to hear is giggling; a very amusing meme video doing the rounds of Twitter brutally lampoons the deal, the huge fall in Block’s share price since it was announced last August, and even Anthony Eisen and Nick Molnar’s Afterpay is now part of Jack Dorsey’s Block empire.
a long-term Afterpay holder and Block is one of the biggest positions in its flagship global growth companies fund.Outside of a small update provided by Block at a conference in early December, there has been relatively little data for investors to track the company’s recent performance, Orthman says. He says this is one reason Block has been swept away in the broader market move away from high valuation growth stocks and towards value stocks and cyclicals.
The December update, which suggested growth had been a little weaker than the market expected in November, led to RBC analyst Daniel Perlin slashing his price target to $US203, from $US295.Orthman is sanguine about the near-term numbers, pointing out that October and November appear to have held up against strong growth the previous year. He believes the sell-off looks overdone. “Block is trading as if they’re going to have a significant downgrade when they report in February.
Orthman sees two key growth drivers for Block. The first is increasing user numbers on both sides of the business. “We believe that the addressable markets are about 50 million businesses that can actually benefit from coming online and using their readers in a simple way and transacting more easily.”
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