Block Inc (SQ) experienced a setback in Q3, as Bitcoin revenue stagnated, and the company missed Wall Street’s revenue expectations. This led to a 12% drop in Block’s shares during after-hours trading on November 7.
Revenue Report and Stock Reaction
After the market closed, Block’s shares fell by 12.3%, reaching a low of $66, following a 3.05% loss during regular trading hours, where the stock closed at $75.27. Although the shares have since recovered slightly, they remain down by 1.7%. Despite this downturn, Block’s stock has seen a 4.2% increase overall this year.
In its Q3 report, Block Inc announced total revenues rose by 6.4% year-over-year to $5.98 billion. However, this fell short of analyst predictions, which expected revenues of $6.17 billion.
Bitcoin Revenue Stays Flat
Block’s Bitcoin revenue, primarily from transaction fees on Cash App, remained at approximately $2.43 billion, the same as last year. The Bitcoin market, however, remained stable, averaging around $60,000 from July to September 2023.
Strategic Changes for Future Growth
Block Inc is “winding down” its decentralized finance (DeFi) business, TBD, in response to challenges. The company now plans to focus on Bitcoin mining and its self-custody wallet, Bitkey, aiming to strengthen its position in the crypto market.
Block has reduced its investment in TIDAL to focus more on crypto services. The company believes this shift will boost its Bitcoin initiatives, which it sees as a strong market fit.
Financial Highlights
Despite the revenue miss, Block reported a 19% increase in quarterly gross profits, totaling $2.25 billion. The net income for the quarter was $283.7 million, aligning with analyst expectations.
Bitcoin’s price has fluctuated, recently peaking just below $77,000, suggesting potential growth in the crypto market.
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Disclosure: This article is for educational purposes only and does not constitute investment advice.