Is this ASX 200 BNPL player focused on growth or less risk?

ASX 200 BNPL shares have had a stellar month but is growth the priority or fewer bad debts?

The Block Inc (ASX: SQ2) share price has surged 26% in the past month. Meanwhile, the Zip Co Ltd (ASX: ZIP) has exploded 146% in a month.

Let’s take a look at what is going on at Block.

How is block performing?

Block (ASX: SQ2) acquired Afterpay in February 2022. Block is also listed on the New York Stock Exchange (NYSE). In the second quarter of 2022, Block reported a 29% increase in gross profit to $1.47 billion.

Afterpay delivered US$5.3 billion of total transactions in the quarter. This was a 13% boost. However, as my Foolish colleague Brooke recently reported, fellow BNPL share Zip delivered a 20% transaction increase in the June quarter.

It appears lowering risk could be a focus for Block. Speaking at a conference call following financial results, Block financial officer Amrita Ahuja highlighted how the company’s consumer repayments are improving. She said:

We continue to see healthy consumer repayment behaviour with 95% of instalments paid on time.

Losses on consumer receivables were 1.02% of Gross Merchandise Value (GMV) during the second quarter, an improvement compared to 1.17% in the first quarter, driven by mix shift, as well as enhancements to our risk models and processes during the first half of the year.

Analysts at Credit Suisse have recently maintained an outperform rating on the block share price with a US$125 price target.

Block share price snapshot

The Block share price has fallen 31% in the past year, nearly 24% more than the S&P/ASX 200 Index (ASX: XJO) benchmark.

Block has a market capitalisation of nearly $4.6 billion based on the current share price.

The post Is this ASX 200 BNPL player focused on growth or less risk? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Block, Lake, Mirvac, and QBE shares are racing higher
• Why are ASX 200 tech shares flying higher on Thursday?
• Why has the Block share price exploded 9% on the ASX today?
• Why Block, CBA, Mesoblast, and NAB shares are dropping today

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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