Block: Can Management Execute On A Good Plan? (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Block's transaction revenues have seen a sharp decline, attributed to a fall in gross payment volumes, which is geared toward consumer activity in the retail sector.
• The macros indicate mixed signals for top-line growth acceleration recovery in gross payment volumes, with Consumer Sentiment rebounding well but Retail Sales data underwhelming expectations.
• Block has a good plan to lay off 1000 employees and improve workforce efficiency. My calculations reveal that this can right-size their employee productivity metrics vs. peers and boost margins meaningfully.
• However can Dorsey's decentralized, non-hands-on leadership style engender the required employee productivity changes? I believe some proof of execution is required to gain confidence on this catalyst.
• Given that context, Block's 22% premium 1-yr fwd P/E valuations vs. its peers leave little margin of safety.

Read the full article here.