Afterpay owner Block down as bitcoin crash bites

The buy now, pay later giant missed market expectations on payment volumes, sending its share price down.

Block purchased Afterpay in a major deal last year. Picture: Andrew Henshaw

Block – the buy now, pay later giant which owns Afterpay – posted a 23 per cent rise in gross payment volumes in the three months to June 30 – well below market expectations.

In the quarter, net revenue was $US4.4bn ($6.3bn), down by 6 per cent year-on-year, weighed down by a collapse in revenues from its bitcoin business, Block said in an investor update.

Transaction and loan losses more than doubled – up 225 per cent on a year-on-year basis – to $US157m, with Block attributing that to its BNPL platform.

“In the second quarter of 2022, net loss attributable to common stockholders was $US208 million, which was impacted by $US57m of amortisation of acquired intangible assets, a $US36m bitcoin impairment loss, and $US17m in deal and integration-related expenses; excluding these items, net loss was $US98m,” the company told investors in a letter on Friday.

Regulatory issues and rising interest rates have pushed down the price of bitcoin this year by around 36 per cent.

Block reported a second quarter gross payment volume of $US52.5bn, almost 2 per cent below Bloomberg’s consensus estimate of $US53.47bn.

In a note to clients, analysts at RBC Capital Markets said the results showed ‘solid net revenue, gross profit and adjusted (earnings) against our and Street expectations, partially driven by execution in its strategic priorities of growing up-market with larger merchants, expanding internationally and building out more omnichannel capabilities”.

“While this is encouraging, we note a material deceleration in (gross payment volumes), particularly in Cash App,” they said.

While the Nasdaq rose 0.4pc overnight, the ASX-listed sector heavyweight was down about 7 per cent in after-hours trading.