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.
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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.
