Block's S&P Debut May Spark Massive Upside
It's hard to ignore the upside when index funds are set to grab over 54 million sharesin other words, more than seven times its usual daily trading volume.
Warning! GuruFocus has detected 6 Warning Sign with XYZ.
Huang points out that this influx should juice liquidity and give the share price a lift just ahead of the rebalance.
On top of that, faster product rollouts and sharper marketing have kicked new momentum into Block's merchant tools and Cash App offerings.
His $90 target rests on a five times forward gross profit multiple, still below the seven to nine times range that many fintech peers command.
That gap suggests there's room for investors to rerate Block alongside its inclusion boost.
Wall Street expects second?quarter earnings per share of 67 cents per share, down about 28% YOY, and revenues of $6.27 billion when results land on August 7.
Despite the fundamental headwind, inclusion?driven demand often outpaces those drags in the weeks around rebalance.
For anyone watching fintech, the S&P debut and the Q2 print will be must?see events. They should set the stage for Block's next move higher.
This article first appeared on GuruFocus.
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