Key Stats for Block Stock
- Past-Week Performance: -5.7%
- 52-Week Range: $44.3 to $82.5
- Current Price: $60.2
What Happened?
Block (XYZ), a payments and financial services company serving small businesses through Square and consumers through Cash App, announced on February 26 that it would cut its workforce from over 10,000 to just under 6,000, citing AI-driven productivity gains that have already pushed production code output per engineer up more than 40% since September, while simultaneously raising its 2026 adjusted operating income guidance to $3.2 billion, a 54% increase year over year.
CEO Jack Dorsey announced the reduction on February 26 alongside Q4 2025 results that showed adjusted earnings per share of $0.65 meeting consensus and adjusted EBITDA of $930 million beating the IBES estimate of $915.2 million, with the company expecting $450 million to $500 million in restructuring charges in Q1 2026.
Cash App, the peer-to-peer payments and banking arm that generates the majority of Block’s gross profit, delivered $1.83 billion in Q4 gross profit, up 33% year over year, while Borrow, the short-term consumer lending product embedded within Cash App, posted origination volume growth of 223% year over year to $18.5 billion, a pace that compares favorably to Klarna, now valued at roughly $5 billion after a $46 billion private valuation in 2021.
CFO Amrita Ahuja stated on the Q4 2025 earnings call that “we are increasing our guidance for adjusted operating income in 2026 to $3.2 billion, reflecting year-over-year growth of 54% and 6 points of margin expansion relative to 2025,” directly following the company’s announcement of its new leaner operating model built around AI tooling.
Morgan Stanley upgraded the stock to overweight on February 27, raising its price target to $93, and Truist Securities followed on March 18 with an upgrade to buy at a $77 target, citing margin upside from the workforce reduction and improving free cash flow, both calls arriving as Block’s Neighborhoods initiative, which connects Square merchants directly to Cash App consumers at the point of sale, shifted to auto-enrollment in mid-February, adding a commerce flywheel that management believes will compound gross profit growth well beyond the company’s 2028 gross profit target of $15.5 billion.
Wall Street’s Take on XYZ Stock
The workforce reduction, which drops Block’s headcount from over 10,000 to just under 6,000 and produces $450 million to $500 million in Q1 restructuring charges, directly pulls forward the margin expansion already embedded in the company’s 2026 adjusted operating income guidance of $3.2 billion.
TIKR estimates revenue growing from $24.2 billion in 2025 to $26.6 billion in 2026, a 9.8% increase, with EBITDA margins expanding from 14.3% to 17.4%, driven by the leaner cost structure and Borrow, the short-term consumer lending product within Cash App, sustaining 69% origination volume growth.
Wall Street stands at 27 buys and 9 outperforms against 7 holds and 2 sells across 38 analysts, with the mean price target at $86.29, implying 43.4% upside from $60.18, as the consensus pricing in the margin recovery but not yet the full earnings compounding story through 2027 and 2028.
The spread between the analyst low of $51.00 and high of $119.16 reflects genuine disagreement on whether AI-driven productivity gains sustain margins after the restructuring charges clear, making Q2 2026 adjusted operating income, the first quarter with the full cost structure benefit, the number to watch.
What Does the Valuation Model Say?
As TIKR estimates, a mid-case price target of $129.34 by December 31, 2030 implies a 17.5% IRR, supported by a 10.2% revenue CAGR and 22.2% normalized EPS CAGR, driven by Cash App Green’s 10x gross profit per primary banking active and Square’s Neighborhoods commerce flywheel now in auto-enrollment.
Block trades at 16.4x forward 2026 normalized EPS of $3.66, a compressed multiple for a business guiding 54% earnings growth this year and a 22.2% EPS CAGR through 2031, against a 5-year historical EPS CAGR of 23.1%, marking the stock as undervalued relative to its own growth trajectory and structural cost reset.
TIKR’s mid-case target of $129.34 rests on sustained mid-teens gross profit growth, a case already supported by Square GPV reaccelerating to over 12% year over year through February 24 and Cash App primary banking actives growing 22% to 9.3 million in December.
CFO Amrita Ahuja confirmed on March 3 at the Morgan Stanley TMT Conference that Block released more Square products in Q4 2025 than in all of 2024, a velocity signal that the AI tooling advantage is showing up in the product roadmap, not just the cost structure.
The risk is Borrow credit quality: if loss rates on the 223% origination surge deteriorate beyond the mid-teens reduction modeled under a moderate recession scenario, variable profit margins compress and the 54% AOI growth guide breaks.
Q2 2026 earnings will be the first full-quarter read on the new cost structure, and the number that matters is adjusted operating income margin clearing above 21%, confirming the margin expansion path to 26% for the full year.
Should You Invest in Block, Inc.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up XYZ stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track Block, Inc. alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Access Professional Tools to Analyze XYZ stock on TIKR for Free →
