Dorsey Returns as Block CEO, Sets Sights on Growth and Profitability Goals
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Jack Dorsey has returned as CEO of Block (SQ) with a goal of reaching the Rule of 40 metrics by 2026 through cost-cutting and leveraging AI.
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Block initiated a $1B share repurchase program to offset dilution from stock compensation. Management expects stock comp to remain flat in Q4 and decrease meaningfully starting in 2024.
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Block experienced growth across most business segments in Q3 except for a small decline in hardware revenue. Total revenue growth rates have declined each quarter since Q3 2022.
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I estimate Block can achieve $26.6B in revenue in FY24, representing 21% growth over my FY23 revenue estimate of $21.9B. This is based on achievable EBITDA margin expansion.
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My 12-month price target for SQ is $92.48 per share, representing 28% upside. This values SQ at 2.12x estimated FY24 revenue. Traders may want to see evidence of margin expansion before bidding up the share price.