Beaten-Up Block Reports Earnings Thursday. Here’s What to Expect.

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Investors in

Block
,
which has seen its shares beaten up this year after a critical report from a short seller, may have something to celebrate on Thursday if the fintech delivers on expectations for year-over-year and quarter-over-quarter earnings growth.

Analysts surveyed by FactSet expect Block (ticker: SQ)—led by former Twitter CEO Jack Dorsey—to report earnings of 35 cents a share on revenue of $4.6 billion after the bell. That would represent earnings-per-share growth of 59% from the prior quarter and 94% growth from a year ago, with quarterly revenue seen edging down from $4.65 billion in December, though up from $4 billion in March 2022.

Such a solid result should please investors in the company—which includes mobile payments platform Cash App, point-of-sale system Square, and “buy now, play later” service Afterpay—which has seen its stock slide this year. 

Shares in Block entered Thursday down 5.6% in 2023, compared with a 6.5% gain for the

S&P 500
index and a 14.9% jump in the tech-heavy

Nasdaq Composite.
 

Much of the decline in Block stock has come since March 23—before which the stock was up 16% year to date—when Hindenburg Research disclosed a short position and published a critical report about the business. A short position is a trade that effectively bets against a stock, and Hindenburg alleged that Block had inflated user metrics and didn’t rein in illicit activity by customers on its Cash App platform.

Block pushed back against the allegations, first by saying it would explore legal action against Hindenburg, and then by releasing a detailed rebuttal. In a statement, the company laid out verified user numbers and reiterated its strict approach to risk and compliance.

Investors shouldn’t expect headwinds from Hindenburg’s allegations, which split Wall Street, leading to a number of downgrades from analysts, to let up just yet. While the core metrics from Block’s earnings will be key when the company releases results, expect questions—and potentially new revelations—as analysts are almost certain to take advantage of the earnings conference call to grill management.

Write to Jack Denton at [email protected]