저자: 미상 · 외국인
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Block(SQ)은 주가가 최근 6개월 약 50%, 저점 대비 약 100% 올랐지만 3년간 약 70% 하락한 상태다. 총 gross profit은 2018년 13억 달러에서 2023년 75억 달러로 증가했으나 조정영업이익은 3.51억 달러로 낮다. 마이클 버리가 Q4 2023에 매수한 점을 근거로 딥밸류 가능성을 거론하지만, 판매 점유율·성장률 등에서 경쟁사에 뒤처진다는 점과 경영진의 자본배분(Afterpay 인수 등)에 대한 우려를 제기한다. 가치 추정은 가정 기반 시나리오이며 주가 상승 여지가 100% 이상일 수 있다고 언급하나 확정 전망은 아니다.
다듬은 글
recently several subscribers have asked is square or block stock SQ is the ticker a deep value investment this got my interest especially when I saw that Michael bur who has a nose for finding deep value actually bought Square stock in the fourth quarter of 2023 so and and you look at what's gone on with square Block it's up about 50% in the last 6 months about you know closer to 100% from its love but you you you you might say wait a second how is it possible for it to be de value when it's rallied so much you zoom out a bit and you see you know it's still down roughly 70% in the last three years so it's been on quite a ride and despite this painful ride for shareholders you know you are looking at a business where underlying gross profit now some of this is due to Acquisitions we'll talk about that in a second but their underlying gross profit is up significantly you know from 1.3 billion dollar in 2018 to $7.5 billion in gross profit in 2023 and you could see the key contributors of this you have corporate and other which is fairly insignificant I'm really not going to talk about that component in this in this video and it's really cash app and square and cash app is the biggest piece and despite generating $7.5 billion dollar in gross profit this management just can't seem to figure it out like how do you go from 7.
5 billion in gross profit to still managing to burn hundreds of millions of dollars in operating income like I'm thinking it it honestly reminds me of when Elon Musk was going around Twitter which he had just acquired from Jack dorsy All You Know Jack dorsy found Twitter Jack dorsy also found her Square You Know Jack dorsy CEO of square you know Elon Musk was like holding up these shirts in Twitter head headquarters like where is everybody how come people aren't working and like the shirt said like uh stay woke and I I'm thinking like he even though he he talks a serious game about improving profitability it's like stay woke stay broke over here they they can't figure out how to generate real profitability I it's shocking to me that after everything and then they're like well wait a second you got to focus on this adjusted operating income of 351 million when you consider like amortization charges that that's sort of fair I I give that but still it's so low from 7.5 billion to 300 million I mean what that's a lot of just crazy perks that you're giving your employees is my bet is what's going it's it's a lot of funny t-shirts it's a lot of paid time off for for people not working so looking at the different segments you have square which you know doesn't really have a lot of market share in terms of medium-sized businesses but for the small and micro businesses it does have a fair stake from 5 to 133% you know where Merchants the these micro Merchants are using their platform and you could see that roughly half of this business is food and drink vendors and retail shops you might have a mom and pop that's trying to sell you know some jewelry or you know they're talking about beauty and personal care and they just wanted a solution that makes it easy for them to accept credit card and it's really just grown significantly from that easy accessibility to credit card to hey we can offer a lot more we can help you with banking uh we can help you with various software Solutions we can help you with managing your staff with managing your customers marketing loyalty so it's not just about accepting credit card credit card and payment processing have become increasingly commoditized it's how do you offer all these additional software Solutions the operating system for the customer for the merchant where you say Hey you are unrivaled I'm going to stick with you through thick and thin and you know what what's going to drive this growth and there's been a lot of players and ing over time and you know one of which you know you you see you know Square talk about hey we're delivering low teenss gross payment volumes and one of their competitors Clover you know is talking about 30% Revenue growth 177% gross payment volumes value up you know 177% even other competitors that Target larger Merchants like carrot that's a you know approximately uh the same same degree that they are so I I look at their execution and this is something clearly management has indicated that they're aware they need to improve if they want to say hey we're rapidly going to start taking Market sh I mean there are clear competitors growing faster than them out compet competing them what they first had was unrivaled the quickly quick ability to accept credit card with their Square payment offering and they've brought in you know previous management to help you know oversee squares turnaround but in order to really get investors excited you're going to see need to see that value proposition improve and it will need to translate into faster growth because there are clearly competitors that are out competing them and I think that's worth understanding when you look at Square thinking about the valuation you know man I I gotta say I frankly and I'm going to talk more about this later I wish the CFO at at Square block like I I wish that there was a different CFO because the way they report the financials it's it's just backwards or it's it's it's just a pain like frankly like there's so many other cleaner ways to do it and you know they focus on gross profit growth over time versus showing some sort of adjusted sales and talk about you know profit margins per second they it they just make it so much harder than it needs to be in my opinion on how they lay it out never nevertheless uh looking at Square you know thinking about maybe they get to teens margins over time I suspect this could be even better you know I there once again there are Merchants there are cut you know businesses that have achieved much much better margins so I'm sort of you know putting them like giving a discount partly because of their historic execution where it's like you know you have players growing faster with better margins uh help explain that to me um so you have that Dynamic you know saying 15% operating margin maybe they get that long term continue to grow let's say around 10% over the next few years give it a market multiple around 20 times and then Square this segment alone is maybe worth somewhere between 30 and 70% of the current market cap for Block so you could see okay this is roughly half the business but it ignores you know it's it's only focused on this piece it's not focused on the even bigger piece in terms of gross profit which is their cash app and when you look at the cash app this is something where management thinks that they're targeting a $75 billion gross profit opportunity and that's spread across several different you know categories such as peer-to-peer transfers where some people say hey I got the money but now I I need it instantly and if you need the cash instantly uh you know in your account so that way you can go spend on something else that's when they're going to charge a fee and then also Financial Services they think that's really the the huge Market I view this is I'm not really sure how you're unrivaled here um you know thinking about maybe you know trading in stocks or using a debit card I you know I having a no fee savings account checking account you know that that type of you know setup I don't honestly I I don't quite see it but clearly this is a huge and growing business for them because the gross profit is growing a lot of consumers love it and I I do not once again use cash app if you if you have a lot of experience using cash app and uh want to write about uh some of the ways that they profit from your experience and why you like that why they're unrivaled I'd love to read it read it in the commentary below so feel free to leave that you know note but I am truthfully very very impressed with the penetration rate they have in some of the demographics you know like I I once again I'm in the 75% uh that don't in terms of Millennials I guess I think Millennials covers people born in the 1980s and you know so I'm looking at this you know but it's impressive gen Z 34% Gen X 15% so I mean there are it that is a pretty high penetration rate it's not dominant it's not like 70% but it is not insignificant so that that's worth understanding looking at Cash app assuming they can keep the magic going and keep in mind this includes their buy now pay later afterpay acquisition you know assuming they're able to keep growing around 20% last year grew close to 30% assuming they're able to get to 30% profit margins once again nowhere near that then cash app could in theory be worth 100% of the market cap to 200% so in theory this segment alone could generate 100% upside and so this this you know thinking about these different pieces helps me understand why Michael bur would see the Deep value is he was probably bottom fishing you know when the stock was lower and thought to himself hey I'm able to get this segment completely for free you know he was probably getting it where cash app was effectively the entirety of the business and then you're like hey Square which is arguably closer to profitability uh you know this is much more interesting and so you know I think that's the the the Deep value case so is it still deep value now putting these different pieces together and where does it go where does Jack dorsey's baby go an unrivaled investing subscriber posted in our exclusive Discord that I've recently paid my second annual subscription and couldn't be happier I've profited enough already to cover the next 20 years of subscriptions it's not hyperbole I actually did the math that's a direct quote earlier today a fan of the channel also a premium subscriber asked me if I would offer a multi-year subscription personally at this point I don't offer a multi-year premium paid subscription uh I'm I'm flattered by the the ask but I do expect raise prices later this year I expect each year to raise prices um and so now is the time to lock it in if uh you're interested check that out at unrival investing.com for compelling investment ideas and so looking at square or block one of the key aspects I want to look for is ownership I want to see alignment and you know I use ownership sort of as a proxy and this is important distinction because there's ownership and Jack dorsy clearly owns a lot of square stock it alone this stake is worth alone $4 billion so that is worth understanding so that's that's important you know that that owner ship stake is critical but it's important to say what's the difference between ownership and maybe shareholder alignment or will they be a good capital allocator in the years ahead and what's what what's the alignment in terms of the values are they just looking to do Empire building where they buy random things at random prices or they actually you know is it the Warren Buffett I I take pride in this this painting and you know my goal is to you know grow book value per share at X rat over time you know a very tangible goal where you can go oh I can align myself with that and that's that's sort of the question of you know where he might own a lot but will that actually generate adequate returns for shareholders especially when you see some really gross purchases gross as in G because you know that afterpay acquisition when and I covered it back in 2021 I mean it was bananas this was a super sized acquisition that they made cash and stock I believe that they made at Peak valuations this was this was November 2021 that you know investors approved this this $29 billion payout of afterpay just in the fourth quarter of 2023 fast fast forward two years and they're generating around 242 million in gross profit so say $1 billion annualized so they paid 29 times 2 years forward gross profit versus Square which is currently or block which is currently trading at a valuation of seven times gross profit so it just in my opinion it's bananas and they if you can't have a management where you trust them implicitly to be a good Steward of your Capital then you could have another stupid you know payment in the future where you're just saying hey I'm going to pay and I I I don't I don't want to be harsh and use the word stupid so it it's just that you could have something where it's like hey we're going to we're going to pay for monkey pictures in the future and all of a sudden this is going to be worth a lot maybe I'm being too harsh here but once you do this and you're like okay do you have a clear understanding of capital allocation and I I'd argue when you get when you get dancing in the middle of the Mania that was in 2021 it reflects that you do not have the capital allocations skills the social awareness to be a a really great Capital allocator over time in my opinion you know if someone has a different view I'd love to hear it and I think further you know this is a much smaller deal but it was only around you know $200 $300 million verus $29 billion but like he he also bought this music service which was also a disaster title which you know it's it's okay so are you running Square for your own benefit is it for the shareholders so even though he has this $4 billion stake I think you know at the end of the day there's this question of is there just going to be more outrageous purchases in the future not sure now management is is saying hey we're finding religion about you know how many how many people we want to have at our company and they they honestly it's just absurd they talk about like in 2024 our goal is to deliver an improvement from the rule of 29 we achieved in 2023 okay so what venture capital world does is they have these rules of 40 where it's tied to growth and profitability and saying hey if you're not profitable then you should be showing at least that 40% growth and if you you know have less than 40% growth then you should make up for it with the profitability so that way you're hitting it so they're talking about well rule of 29 no one talks about rule of 29 like it it's just like this is once again what language are you speaking this is who does this like Warren Buffett in his multi- deade track record of you know outperformance first all he never made like Peak Acquisitions that were just like bet bet the whole company $29 billion keep in mind this is a $50 billion company now that acquisition of afterpay is still more than half their current market cap for for context and you know so you never seen Buffett's letters rule of 29 you know it's always focused on the actual fundamentals of this business so they are talking about okay we we expect to get to rule of maybe 40 by 2026 and they expect adjusted operating income of 1.15 billion this year once again over a $50 billion market cap versus $1 billion adjusted operating income and so it's the valuation you know you you really have to assume management gets serious about profit margins in the years ahead maybe they do if you put these pieces together looking at Cash app and square ignoring title ignoring their Bitcoin operations uh you know maybe in the years ahead you get over 100% upside it would not surprise me and keep in mind this is a hypothetical framework of course stock price can go way higher way lower depends on their execution it would not surprise me if square or block stock is up over 100% in the years ahead that said I just just think that there are easier plays out there where you could say hey I I trust management to you like own it like I I would love to see a letter from Jack dorsy be like yeah title was a terrible acquisition and we overpaid for afterpay I would love a m Koopa you know if if you if you had this sort of soul searching where you said I made a mistake I'm going to own it here's how we're going to fix it going forward and by the way maybe we we get a new CFO then I'd be more alined and by the way like look I've called out Fairfax one of my Holdings that's a company where I I certainly think it's much easier for me to get my head around they have made mistakes too look they they they once had a big big bet on BlackBerry I mean Blackberry was a disaster but the CEO chairman Prem Watson I mean he calls it out in his letter he's like look this was a mistake he owned it he owned it in 2023 he's like I I made a mistake like you clearly you know there's this difference in in maybe it's Pride that you can't own it but I I would really like to see that and if if he has or you know in in some sort of private setting or set transcript feel free to call it out to me I'd love to be corrected myself you know I'll say whoops I got that wrong I it wouldn't surprise me once again if Square does well over time just because it's gotten so beaten up and there is a lot of potential in these segments but I'd like to see real Capital allocation real alignment with the minority shareholders versus Jack dorsy sort of treating this as as his Empire and doing what he pleases at the honestly at the cost to everyone else so if you enjoyed this video please make a point of hitting this H hit the to unrivaled investing
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