Block slides as drop in bitcoin revenue dents 2nd-quarter earnings for the Cash App parent
- Block shares fell Friday after the company said it took a $36 million impairment charge related to its bitcoin investment.
- Bitcoin fell nearly 60% in Q2, struggling during the so-called crypto winter for digital assets.
Block shares fell Friday after the payments processing company took a second-quarter impairment charge related to bitcoin's crash during the so-called crypto winter for digital assets.
Shares fell 5.1% to $85.13 as Friday trade got underway. The stock this year through Thursday had lost around 44%, and had dropped by 67% over the past 12 months.
Block recorded a $36 million impairment charge "due to the observed market price of bitcoin decreasing below the carrying value during the period," which ended June 30, the company said late Thursday. It had no impairment charges in the first quarter ended March 31.
Bitcoin's price tumbled by nearly 60% between the end of March and the end of June, wrapping up the second quarter at roughly $20,320. The cryptocurrency on Friday traded above $23,000.
Bitcoin has been knocked back from an all-time high above $68,000 set in November 2021, contributing to the plunge in the crypto market's value from its height above $3 trillion to $1.1 trillion. Falling stock prices, regulatory concerns and bankruptcies at some crypto firms have weighed on the market.
Block's Cash App, which allows users to invest in bitcoin and stocks, generated bitcoin revenue of $1.79 billion, down by 34% from the year-ago period.
"The year over year decrease in bitcoin revenue and gross profit was driven primarily by a decline in consumer demand and the price of bitcoin, related in part to broader uncertainty around crypto assets," more than offsetting the benefit of bitcoin's price volatility, said Block, which is run by founder Jack Dorsey.
Total net revenue at Block fell by 6% to $4.4 billion but beat the $4.33 billion consensus estimate from FactSet. Excluding bitcoin revenue, Block said total net revenue rose by 34%, or $662.2 million.
Adjusted earnings of $0.18 a share were higher than the $0.16 a share anticipated by analysts.