Block: Reports of Federal Investigation Into Compliance Issues

Reports have surfaced from NBC News that narrow-moat Block may be the subject of a federal investigation into its compliance practices. A former employee has asserted that the company collects insufficient information from customers, and that this has led to payments being processed from countries that are under economic sanctions, and that Block has processed crypto transactions from terrorist groups. If proved true, the consequences are difficult to predict precisely, but the investigation could lead to significant fines and an increase in costs to bulk up compliance systems. We will continue to monitor this development and will maintain our $90 fair value estimate for now. We would emphasize our Morningstar Uncertainty Rating of Very High for Block's shares.