Investing in SQ Stock for Block in 2025: A Guideline

Investing in SQ Stock for Accessing Block in 2025: A Guide

If you're well-versed in the payments sector, you might be pondering how to invest in Block, Inc. (previously known as Square, Inc. with a drop of 2.85%). Over the past few years, Block has carved out a niche as a trailblazer in payment processing, making it one of the leading fintech firms in the industry.

In December 2021, the company underwent a name change to Block, Inc., primarily to differentiate itself from its well-known subsidiaries such as Square and Cash App.

In this guide, we'll explain how to buy Block shares and offer some guidance on whether Block is a viable investment for your portfolio. We'll delve into Block's financial performance, dividend policy, and potential for future stock splits. We'll also address investing in Block via exchange-traded funds if direct investment seems too risky.

How to Invest

Buying Block Shares

Let's start with the practicalities.

Below, you'll find a series of screenshots demonstrating how to purchase Block shares on Fidelity's user-friendly platform.

First, sign in to your brokerage account at Fidelity, or use any other online broker that supports discreet stock trading, such as Vanguard, Charles Schwab, or E*Trade.

In the top left corner of your screen, click on "Trade" to initiate a trade ticket.

To buy Block shares, make sure that you've selected "Stocks/ETFs" from the "Trade" menu and then choose the account you'd like to use for the transaction.

Enter "SQ" in the "Symbol" field to bring up Block's current trading price, volume, and other essential data. (Note that Block's stock symbol remains unchanged from its previous name.)

For "Action," select "Buy." In the "Quantity" field, calculate the number of shares you'd like to purchase by dividing your desired investment amount by the current share price. For example, if you wish to invest $1,000, divide $1,000 by $67.27 to arrive at approximately 14 shares (with a slight surplus if your broker supports fractional share transactions).

Choose an "Order Type" from the drop-down menu. For quick execution, most users will select "Market", though other options are available for more experienced traders. If you choose "Limit" as your order type, your order won't be executed if the market price surpasses your predetermined limit price.

Finally, for "Time in Force," select "Day." This means that your order will expire at the end of the trading day if it has not been filled. If you choose "Market" as your order type, your order should be filled by the end of the trading day (recommended due to market orders guaranteeing a price).

Once you've verified your entries, click on "Preview order" and then place your order on the following screen.

If your order contains an error or if you don't have sufficient funds to cover the trade, you'll receive an error message requesting you to correct your order ticket.

Should I Invest?

Investing in Block

Whether Block shares are suitable for your portfolio is a matter of personal preference. Some investors may view the prospect of investing in individual companies as excessively risky, while others might see Block's growth potential as an unmissable opportunity.

Block's services provide point-of-sale (POS) systems, enabling merchants to facilitate sales, securely accept payments, and swiftly process transactions. Its Cash App division operates in a similar manner for consumers.

From mid-2021 to mid-2023, Block experienced a significant loss of market value, with its share price plummeting from around $275 to nearly $70 per share. As of December 2024, the stock had slightly recovered, trading at $91.98 with a market cap of approximately $57 billion. On the one hand, the company has demonstrated its ability to boost revenue, with sales increasing from less than $10 billion to nearly $20 billion over the past few years. Its main offerings have also gained widespread recognition in a short time span.

On the other hand, Block has posted some sizable net income losses over the past few quarters, with losses ranging from $80 million to $540 million. These losses can be attributed mainly to excessive operating expenses and higher-than-expected product development costs. Concerns have also arisen about the Cash App brand, which has been used by criminals for illicit activities.

Net Income

The calculation of a company's earnings by subtracting all expenses from its revenue. For income investors, Block may not be an attractive option as it has yet to pay a dividend in its public history and does not appear likely to do so in the near future.

In conclusion, Block may be worth considering as an investment option if you are willing to wait for growth and for the company's management team to bring expenses under control. Additionally, some work must be done to strengthen the Cash App brand's reputation as a reliable and secure payment processor.

Despite robust revenue and profit growth, with a 24% revenue surge in Q3 2023 to $5.62 billion, Block has encountered challenges maintaining consistent net profitability. Although its financial performance indicates substantial operational advancements, profitability has remained elusive in recent phases.

For potential Block investors, the upside is its rapid revenue growth, propelling the company from obscurity a decade ago to one of the most prevalent payment service providers globally.

Dividends

Is Block distributing dividends?

As per the latest data, Block fails to pay dividends to its shareholders. This practice is common among growth-oriented companies in the sector and doesn't present a severe financial concern.

ETFs

ETFs with Block exposure

Diversification is a cornerstone of sound investing; you wouldn't want to invest heavily in a single company, as that could be detrimental if the company undergoes significant share price declines.

ETFs, or exchange-traded funds, come to the rescue in such scenarios. By opting for an ETF, you can invest in a fund that holds numerous companies across the same sector, along with Block itself.

If you find this strategy attractive, consider ETFs like the iShares Blockchain and Tech ETF (IBLC -1.5%) or the Ark FinTech Innovation ETF (ARKF -1.17%).

ETFs can help mitigate some risks associated with investing in individual stocks. By doing so, you'll still have an opportunity to invest in Block without being vulnerable to its unique business risks.

Stock splits

Will Block undergo a stock split?

There's no indication of an impending Block stock split, and the company hasn't split its shares in the past. If the stock becomes excessively expensive in the future, a stock split could be possible. However, as of late 2024, there were no plans for Block to undergo a stock split.

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The Takeaway

The Takeaway on Block

Block has garnered considerable media attention for its revenue growth and the wide-spread reach of its two primary services, Square and Cash App. However, the company has experienced difficulties in maintaining its net margin over the last few quarters and providing rationale for its previous sky-high share price.

In conclusion, Block stocks remain attractive for investors who trust the company's management team's ability to manage non-operating expenses and those ready for speculation on the company's potential to boost revenue growth further.

Before investing in any stock, commit to holding it for the long term regardless of daily fluctuations. Simultaneously, ensure you understand how the stock fits into your broader financial portfolio.

FAQ

Block Investing FAQ

Has Block shown profitability in the past?

Block has consistently recorded positive gross margins and positive net margins in the past. Between 2019 and 2021, Block posted a net margin between $150 million and $400 million in each of the three fiscal years.

What's the future outlook for Block stocks?

The future of Block stocks is unpredictable. On the one hand, Block has experienced substantial revenue growth over the past decade and has maintained a positive gross margin. On the other hand, the company faces challenges in managing non-operating expenses and confronts Cash App's reputation issues.

Sam Swenson, CFA, CPA has no position in any of the stocks mentioned. Our Website has positions in and recommends Block. Our Website has a disclosure policy.

If you're considering diversifying your portfolio, you might be interested in ETFs with Block exposure. Options like the iShares Blockchain and Tech ETF (IBLC) or the Ark FinTech Innovation ETF (ARKF) could be viable choices, as they allow you to invest in Block and other fintech companies simultaneously.

Additionally, if you agree that investing in growth-oriented companies can be risky, you may want to consider the prospect of investing in Block via ETFs as a means of mitigating some of those risks. This strategy can allow you to capitalize on Block's potential growth without making a large investment in a single stock.