Block (NYSE:SQ) is in the news as federal prosecutors are examining financial transactions at the company. According to an NBC News report, the prosecutors are scrutinizing possible compliance violations within Block’s primary business units, Square and Cash App. SQ stock closed over 8% lower on Wednesday after the news broke out.
Per the report, a former employee has furnished documents to the prosecutors indicating several deficiencies. Those include problems with customer information collection, processing transactions from countries under economic sanctions, and handling cryptocurrency transactions for terrorist organizations. Allegedly, numerous transactions, spanning credit card payments, dollar transfers, and Bitcoin transactions, were not reported to the government as mandated. The ex-employee asserts that Block failed to address these breaches despite being notified.
While it remains to be seen how this investigation evolves, Block is scheduled to release its results for the first quarter of 2024 today. Let’s delve into the Street’s forecast.
Block – Q1 Expectations
Wall Street expects Block to report sales of $5.82 billion in the first quarter of 2024, up about 16.6% from $4.99 billion in the prior-year quarter. The increase in Bitcoin (BTC-USD) revenue and Gross Payment Volume (GPV) will likely support Block’s top-line growth rate.
Analysts expect Block to generate earnings of $0.72 per share, up 80% year over year from $0.40 in the prior-year quarter. Higher revenue and a focus on efficiency will likely boost Block’s gross profit dollars and earnings per share.
Is Block a Buy or Sell?
Wall Street is bullish about Block’s prospects ahead of earnings. With 26 Buys and four Holds, Block stock has a Strong Buy consensus rating. Analysts’ average price target on SQ stock is $90.42, which implies 35.28% upside potential from current levels.
