What could $5,000 invested in Block shares become in 1 year?

Is it worth investing in this tech stock? Let's find out.

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Block Inc (ASX: SQ2) shares have been a good place to invest over the last 12 months.

During this time, the payments company's shares have risen 20%. This is significantly better than the 3.3% gain that the ASX 200 index has made over the same period.

This means that if you had invested $5,000 into its shares a year ago, you would have seen your investment grow to be worth $6,000 today.

Why have Block shares outperformed?

Investors have been buying the company's shares due to a significant improvement in its performance.

For example, in November, investors were impressed with the release of Block's third-quarter update.

That update revealed a 24% increase in revenue to US$5.62 billion and a 21% lift in gross profit to US$1.9 billion for the three months. A key driver of this was its Cash App business, which reported rapid growth in volumes.

Block then followed this up with another strong quarterly update in February. It reported a 24% increase in net revenue to US$5.77 billion and a 22% lift in gross profit to US$2.03 billion.

The latter comprises a Square gross profit of US$828 million, up 18% year on year, and Cash App gross profit of US$1.18 billion, up 25% year on year.

But those gains have been and gone. What might happen if you invest $5,000 into Block shares today?

Let's see what analysts are tipping for the tech stock over the next 12 months.

Investing $5,000 into this tech stock

Firstly, if you were to invest $5,000 (and an extra $35) into Block's shares today, you would end up owning 44 units.

But what could they be worth in a year?

The good news is that a couple of brokers believe that the company's shares can keep rising from current levels.

For example, the team at Citi responded to the company's most recent quarterly update by retaining its buy rating with an improved price target of US$86.00.

Based on current exchange rates, this equates to a price target of approximately A$134.00 for its locally listed shares. This means that your 44 units would have a market value of $5,896 if they were to rise to that level.

Elsewhere, US broker Seaport recently put a buy rating and US$95.00 (A$148) price target on Block's shares. If your shares were to climb to that level, it would give them a market value of $6,512. This is approximately $1,500 more than your original investment.

It is of course worth remembering that brokers don't always get it right. But time will tell if they do for Block's shares.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro 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. The Motley Fool Australia has positions in and has recommended Block. 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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