Block (SQ -0.30%) has emerged as one of the more essential fintech companies. Through its Square ecosystem and Cash App, it has become one of the largest fintech companies in the world.

However, its focus on Bitcoin and other businesses has alarmed some investors, and amid a bear market, the stock has lost more than 75% of its value. The question for investors is whether the problems with some of its newer businesses outweigh the successes of its core segments.

Green flag: Block's core businesses

For all of the coverage of the name change, a significant portion of Block is still Square, or rather, the Square segment. Square succeeded because it is a one-stop shop for small and medium-sized businesses within the finance realm. These enterprises can handle point-of-sale, payroll, loans, and even banking under the Square umbrella.

The company has also taken this ecosystem to seven other developed countries. And because three of those countries are in the European Union, it can likely extend into the remainder of the E.U. with relative ease. In the third quarter, non-U.S. activity accounted for 15% of gross profit, up from 5% over the previous year. This means that the company has just begun to capitalize on this non-U.S. business.

Moreover, the Cash App digital wallet has emerged as a formidable competitor to PayPal's Venmo, bolstering Block's presence on the consumer side. Cash App was the first digital wallet to allow cryptocurrency transactions. More recently, it has added a buy now, pay later option through Afterpay, and this fall, it enabled e-commerce transactions outside Square's network.

Thanks in large part to these segments, Block reported $1.6 billion in gross profit in the third quarter of 2022, a 38% increase compared with the same period in 2021. Also, the company reported 29% growth in the Square ecosystem and 51% for Cash App, an indication that these segments are in a position to drive considerable revenue growth for a long time to come.

Red flag: Management's emphasis on underperforming businesses

Despite the successes of the Square ecosystem and Cash App, one has to wonder if Block's management is Block's worst enemy. Admittedly, cryptocurrency bulls will like that Block has developed a financial ecosystem for Bitcoin.

However, that has also made Block stock a proxy for Bitcoin in many respects. Bitcoin sells at a 75% discount to its all-time high, and it generally tracked the decline in Block stock.

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Additionally, the collapse of FTX has led many investors to question the legitimacy of cryptocurrency. To Block's credit, it only invests in the top cryptocurrency, Bitcoin, but the focus on Bitcoin draws attention away from Block's most profitable segments.

Worse, one of its new segments has no obvious relationship to fintech at all. CEO Jack Dorsey partnered with Jay-Z to start Tidal, the company's music service. It seeks to differentiate itself as an "artist first and fan-centric business model." Still, it competes with several other music services in an area outside of its core competency, a factor not likely to make the stock compelling to fintech-oriented investors. 

Should I consider Block?

Despite the danger that Tidal and other segments have taken the focus off its successful core businesses, I lean toward considering Block stock as a long-term buy. Indeed, investors have lost confidence in cryptocurrency, which has hurt its Bitcoin business. 

However, the company has successfully brought small and medium-sized businesses into the Square ecosystem, and its expansion outside the U.S. has barely begun. Moreover, with Cash App becoming increasingly integral on the consumer side, the strength of Block's core businesses should outweigh potential underperformance elsewhere.