Block SQ has been making strong endeavors to bolster its presence in the cryptocurrency space.
This is evident from the company's recent tie-up with an African crypto exchange, Yellow Card. The partnership is focused on enabling cross-border payments to 16 African countries, including Ghana, Nigeria, South Africa and Kenya.
Block aims at facilitating a decentralized network for fiat-bitcoin cross-border payments in Africa.
This will allow people in the United States to initiate payments in USD and recipients on the other end to receive the payments in local fiat currency.
Block already tested money transfers successfully between the United States and countries like Ghana, Kenya and Nigeria on the back of its bitcoin developer platform, TBD.
In the latest remittance process, TBD acts as a bridge between the fiat and bitcoin worlds with the help of its tbDEX protocol. Yellow Card also offers software to plug into each of the 16 countries’ financial networks.
Block is leveraging stablecoins and bitcoins to reduce the fees needed for cross-border payments.
Block, Inc. Price and Consensus
Block, Inc. price-consensus-chart | Block, Inc. Quote
Crypto Prospects in Africa
Block has taken the underlined step at a time when Africa needs innovative solutions, thanks to which the continent’s crypto market is growing. This can be attested by looking at the growth numbers of a few African nations.
Per a report from Statista, the cryptocurrency space in South Africa is expected to generate revenues worth $161 million in 2023. The figure is likely to reach $235.1 million by 2027, seeing a CAGR of 9.9% between 2023 and 2027.
The same report indicates that the underlined market will generate revenues worth $12 million in 2023. The figure is likely to reach $18.1 million by 2027, witnessing a CAGR of 10.8% between 2023 and 2027.
The report also suggests that the Nigeria market for cryptocurrency is expected to yield revenues of $16.4 million in 2023. The figure is likely to reach $38.5 million by 2027, seeinga CAGR of 23.8% between 2023 and 2027.
Apart from the latest move, the company’s recent investment in an Africa-based renewable bitcoin miner, Gridless, remains noteworthy. Notably, Block, along with Stillmark, led a $2-million seed funding round in Gridless.
We believe Block is well-poised to capitalize on the above-mentioned growth prospects on the back of its deal with Yellow Card and Gridless.
This, in turn, will likely aid the performance of its crypto business, which has been facing a downturn for the past few quarters due to a topsy-turvy situation in the overall cryptocurrency market, thanks to Federal Reserve’s aggressive stance on cutting down the inflation rate through continuous interest rate hikes and FTX crash.
Bitcoin revenues contribute the most to the total revenues of Block. In fourth-quarter 2022, bitcoin revenues were $1.83 billion (39.4% of net revenues), which were down 6.5% year over year.
Thus, strengthening the crypto business will likely aid the company’s overall performance.
The Zacks Consensus Estimate for 2023 revenues is pegged at $19.8 billion, indicating growth of 12.7% from that reported in 2022.
The consensus mark for 2023 earnings is pegged at $1.63 per share, indicating growth of 63% from that reported in 2022.
SQ has gained 1.9% year to date, underperforming the industry’s growth of 3.9%.
Zacks Rank and Stocks to Consider
Currently, Block carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Arista Networks ANET, Salesforce CRM and Analog Devices ADI. Arista Networks and Salesforce sport a Zacks Rank #1 (Strong Buy), and Analog Devices carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks has gained 33% in the year-to-date period. The long-term earnings growth rate for ANET is projected at 14.17%.
Salesforce has gained 43.5% in the year-to-date period. CRM’s long-term earnings growth rate is expected to be 16.75%.
Analog Devices has gained 14.2% in the year-to-date period. The long-term earnings growth rate for ADI is anticipated to be 10.5%.
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