Jack Dorsey, the tech giant who co-founded Twitter and Square.
MARCO BELLO/AFP via Getty
Morningstar’s take on blocking
One analyst who likes Mr. Block is Morningstar's Brett Horn. He has assigned the company a narrow outer moat, meaning he thinks it has a competitive advantage that will last for at least 10 years.
Mr. Horn estimates the block's fair value at $90, well above the May 8 market price of $71.40. His stock price has increased 39% in the past six months.
He praises Block's traditional Square business model. The model “features efficient customer onboarding, innovative POS devices, flat fees, and a suite of in-house developed and integrated software solutions,” he said.
This will allow the company to “reach and retain smaller sellers that would be impossible for other acquirers.”
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To get big enough, “Square needed to move beyond its small-store base,” Horn said.
“And the results over the past few years suggest that is exactly the case. Around two-thirds of payments 1715232941 Earned from merchants with annual total payments in excess of $125,000. ”
This means profitable growth for the block. “With upstream and cross-selling moves, we believe Square can significantly improve margins over the next few years and demonstrate the viability of its business model,” Horn said.
But don't get too excited. “We think of Square as a narrow-moat niche operator, not a disruptor,” he said. “Market share is limited by relatively high pricing.”
Are you an S&P 500 member of Block?
Still, the company's strength makes it “more likely” it will be added to the S&P 500 index, but “not certain,” Barclays analyst Ramsey El Assal wrote in a report, The Fly reported. Ta.
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He said Block's fourth quarter was profitable, so it qualifies. Furthermore, financial services is his second underweight industry in the index. And the block has a market capitalization of $44 billion. He said inclusion in the index could boost Brock's stock price.
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Eligibility for the S&P 500 is “controlled by quantitative criteria, including financial viability, publicly traded stock, sufficient liquidity, and company type,” according to S&P Global.
S&P Global's U.S. Index Committee “selects eligible stocks based on sector representativeness,” S&P Global said.
“Among the key requirements is that the company has sufficient market capitalization to qualify as a large-cap company. It also has sufficient free float, or the percentage of shares available for public trading. There must be.”
Other Wall Street Analysts:
Blocks tick these boxes given their size and profitability.
As a member of the S&P 500, you get two benefits for your stocks. The first is reputation. The 500 companies are the largest and most successful companies on the market. Being included in the S&P 500 is a condition of success.
Second, a large number of exchange-traded funds and mutual funds replicate this index. Therefore, the managers of these funds have to buy shares in newly selected companies.
According to S&P Global, as of December 31, 2022, $11.4 trillion in assets were indexed or benchmarked to the S&P 500.
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