The fintech industry has seen a rapid surge in growth and innovation, with many companies exploring new avenues for expansion. One such company is Block (formerly Square), whose CEO Jack Dorsey has set his sights on the burgeoning digital asset market.
Block operates two successful ecosystems - Square for merchants and Cash App for individuals, both of which are leaders in their respective markets. Since its initial public offering in 2015, this top-rated fintech stock has doubled the gain of the Nasdaq Composite Index. However, as of May 17th, it's currently trading at 74% below its peak price from August 2021.
While some investors might view these figures as an indication that Block presents a once-in-a-generation buying opportunity, others may be hesitant due to Dorsey’s vocal support of Bitcoin. In fact, in 2021 he stated that if he wasn't working at either Twitter or Block (then Square), he would be focusing solely on Bitcoin – much to the surprise of many observers.
Recently though there seems to have been a renewed focus on Bitcoin within Block itself. In the company's first-quarter shareholder letter for 2024, Dorsey outlined Block's strategy regarding Bitcoin; one that revolves around his belief that an increasingly digital world will require a decentralized currency native to the internet.
Accordingly, plans are underway at Block to design and sell crypto mining equipment through Spiral and TBD – two Bitcoin-focused divisions aimed at making cryptocurrency more useful in everyday life while disrupting cross-border payments simultaneously.
Furthermore, since Cash App started allowing users to trade bitcoin back in 2018 – albeit only generating $80 million out of Q1’s gross profit total of $2.1 billion from facilitating such trades so far - it appears clear that block sees potential value beyond its core operations.
But what if bitcoin doesn’t take off as hoped? While we won't know how this plays out anytime soon given we're still in the early stages of Bitcoin's development, it’s worth noting that Block's primary operations would likely remain robust.
This is analogous to Meta Platforms (formerly Facebook) and its CEO Mark Zuckerberg who has made significant investments into metaverse ambitions with Reality Labs; even if this venture doesn’t pay off, their main social media apps are incredibly successful on their own.
Investors considering Block as a means to leverage software and digital payment trends need to also consider whether they are bullish on bitcoin. This requires adding another layer of research into your investment process.
It’s understandable why some investors may view Dorsey's focus on Bitcoin as a distraction from Block's core mission – servicing financial needs through quality products and services. Critics argue that Bitcoin should be left out of this strategy altogether.
However, there are compelling reasons for Dorsey positioning Block in this way. By integrating Bitcoin into its long-term strategy, he believes it can help fulfill the company’s mission of increasing financial freedom and economic empowerment by facilitating greater adoption of top digital assets.
Despite potential concerns around diversification, I remain bullish about both Bitcoin and Block's long-term trajectory. Given these factors, investing in blocks could indeed represent a once-in-a-generation opportunity for those willing to hold for the next decade. #ETHETFS #btc70k #altcoins #BinanceLaunchpool $BTC $ETH $PEPE
