Shares of Square-parent Block reversed down Friday after the company reported first-quarter earnings and revenue that topped Wall Street targets. SQ stock failed to benefit from gross profit coming in above views amid controversy over the consumer Cash App business.
Block reported March quarter earnings after the market close on Thursday. The company said the Square Cash App had 53 million "monthly transacting actives" as of March 30, up 17% from 46 million a year earlier. Short seller Hindenburg Research has challenged Block's accounting methods.
Square earnings for the quarter ended March 31 were 40 cents per share on an adjusted basis, up 122% from the year-earlier period. Analysts had projected earnings of 35 cents a share.
Also, Square said net revenue rose 26% to $4.99 billion, including Cash App transactions for digital cryptocurrency Bitcoin. SQ stock analysts had predicted revenue of $4.6 billion.
SQ stock initially rose on the earnings beat. But shares fell 2% to close at 59.25 on the stock market today.
Square Stock: Gross Profit Beats
Financial analysts also view gross profit as a key metric for SQ stock. Gross profit came in at $1.71 billion, up 32%, vs. estimates of $1.65 billion. Cash App gross profit jumped 43%.
The Square Cash App helps individuals manage money and buy stocks and cryptocurrency.
Gross payment volume from merchant customers rose 17% to $51.12 billion, topping estimates of $50.89 billion. But some analysts have said Fiserv's Clover merchant business could be taking share from Square.
Cost-cutting boosted earnings before interest, taxes, depreciation and amortization, a key metric known as EBITDA. It popped 89% to $368 million, handily beating estimates of $268 million.
SQ stock had retreated nearly 6% in 2023 heading into the Block earnings report. San Francisco-based Block's earnings included consumer lending firm Afterpay.
Meanwhile, SQ stock holds a weak Relative Strength Rating of 20 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
