Cathie Wood remains extremely bullish on the fintech company Block, which has a lot of analysts confused. Block was on a strong growth track when Wood’s Ark Investments first started making predictions back in 2020, but last year, its stock dropped like a rock. Block would now have to make an eye-popping 505% turnaround to hit Wood’s projected $375 per share by next year. But Wood is doubling down on her predictions. So what’s going on at Block, and could it actually make an impressive comeback?
Who Is Block?
Block is the company behind two popular apps: Cash App and Square. Cash App is a consumer-facing platform that offers comprehensive spending, saving, and other financial options. Square is a cohesive payment processing system for small to medium-sized businesses. Last year, Cash App was actually the most downloaded financial app, and the ninth most downloaded mobile app overall, across the United States.
Is Ark Investments Poised for a Comeback?
Cathie Wood and her Ark Investment firm have made some interesting investing choices lately. She’s been bullish on a lot of companies that struggled during or after the pandemic and have yet to turn around. So analysts are understandably skeptical of her opinions on Block.
On the other hand, Block could possibly be the exception. After all, Block isn’t doing badly these days. For the first quarter of 2024, Block beat both top-line and bottom-line expectations. Its gross profit grew more than 20%, while its non-GAAP net income jumped by 98%. Both Cash App and Square are adding users at a decent clip.
It would be a heavy lift for Block to make a more than 500% turnaround in order to reach Wood’s projection for 2025. But it could get there over the next three to five years. Block currently has just 5% of the estimated $205 billion addressable market, so there is plenty of room to grow. It’s projected to grow earnings per share by more than 40% annually, and its 4.9 price-to-gross-profit multiple is a discount from the three-year average of 11.6. There’s a lot going for Block, even it doesn’t quite hit Wood’s target.
Neither Lisa Fritscher nor Stocks.News have positions in this company.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...