Key Stats for Block Stock
- Price Change for Block stock: -7.73%
- $XYZ Share Price as of Nov. 7: $65.45
- 52-Week High: $99.26
- $XYZ Stock Price Target: $88.51
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What Happened?
Block (XYZ) stock tumbled nearly 8% on Friday after the payments company reported third-quarter results that missed Wall Street’s expectations.
While Block beat on gross profit, earnings per share of $0.54 came in well below the $0.66 consensus estimate. Revenue of $6.11 billion also fell short of the expected $6.31 billion.
The real concern centered on Square, the company’s point-of-sale business. Gross payment volume grew 12% year-over-year to solid levels, but gross profit growth for Square slowed to 9%, down from 11% in the previous quarter.
Management attributed the deceleration to a change in processing partners for operational flexibility and a shift toward lower-margin hardware sales.
However, Block stock did see some bright spots in the results as total gross profit grew 18% to $2.66 billion, topping the $2.60 billion estimate. The acceleration from 14% growth last quarter was driven primarily by Cash App’s impressive 24% growth in gross profit.
Cash App reached 58 million monthly active users in September, with particularly strong momentum in its financial products.
Cash App Borrow originations surged 134% year-over-year while maintaining stable risk loss rates and delivering 24% annualized net margins.
Post-purchase Buy Now Pay Later on Cash App Card reached $3 billion in annualized originations by early October.
For the fourth quarter, management guided gross profit growth to accelerate again to over 19%, reaching $2.755 billion.
Adjusted operating income in Q4 is expected at $560 million with margins expanding to 20%. The company also raised full-year gross profit guidance to $10.243 billion, implying more than 15% year-over-year growth.
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What the Market Is Telling Us About Block Stock
The decline in Block stock suggests investors are concerned about the slowing momentum in Square despite the strength in Cash App.
The processing partner change that resulted in a 2.6 percentage point increase in the third quarter won’t be fully lapped until the second quarter of 2026, meaning near-term pressure on Square’s margins will persist.
However, there are several reasons to be more optimistic about Block stock beyond the headline miss. The company’s go-to-market transformation is showing real traction as sales-driven new volume added was up 28% year-to-date, with field sales and partnerships expanding rapidly.
Block went from essentially zero ramped field sales reps at the start of the year to over 100 today.
Square is also seeing notable strength in moving upmarket, with sellers processing over $500,000 in annual volume, representing a 20% year-over-year growth rate— the strongest growth rate for this cohort since early 2023.
International markets are performing exceptionally well, with gross payment volume up 26% year-over-year.
The Cash App story remains compelling for Block stock as gross profit per monthly active user grew 25% year-over-year to $94, driven by deeper engagement across banking, commerce, and lending products.
Primary banking actives reached 8.3 million, up 18% year-over-year, and accelerated to 8.7 million in October.
Management emphasized that Cash App Borrow is delivering exceptional returns with a 30% return on invested capital.
The product is also driving meaningful engagement lifts, with borrow actives showing 3x higher inflows, 2x higher Cash App Card spend, and 3x higher retention rates compared to non-borrow users.
Looking ahead, Block stock appears positioned to benefit from several catalysts. It expects to deliver its strongest new volume-added performance ever in 2025 by expanding field sales, partner programs, and targeted marketing.
Product innovations showcased at the recent Square Releases event, including AI-powered tools and the Neighborhoods feature that connects Square sellers with Cash App’s 58 million users, are expected to drive growth.
Block’s first Bitcoin mining revenue through Proto also represents a potential new growth avenue, though it remains a modest contributor in the near term.
From a profitability standpoint, adjusted operating income increased 28% year-over-year, despite significant investments in sales, marketing, and lending products.
Block is approaching Rule of 40 performance heading into 2026, suggesting a healthy balance between growth and profitability.
Management noted they observed slightly slower Square GPV growth towards the end of October, which they believe was primarily weather-related.
However, they’re also seeing some of the strongest new volume added metrics in a long time, suggesting underlying momentum remains strong.
Block stock trades at a meaningful discount following today’s decline, presenting a potential opportunity for investors who believe in the long-term Cash App and Square stories.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
