Key Takeaways
- Dan Loeb’s Third Point opened a new position in Block (XYZ) in Q2, worth $194 million as of June 30, while a fund with $6.2 billion in US stocks cut its Block shares by 73%.
- Block’s stock is up just 0.3% since June 30, so neither fund has been proven right yet.
- Block trades at 17x forward earnings, below its three-year average of 20x, and analysts have raised their EPS estimates since June.
- Rising loan losses are the main risk, but Loeb has the better case going into Block’s Q3 report in early November.
Dan Loeb’s Third Point bought Block in Q2. In the same three months, a fund with $6.2 billion in US stocks sold most of its Block shares.
Both moves come from the funds’ 13Fs for the quarter ended June 30, filed Aug. 14, the latest either has filed.
Block reports its Q3 in early November, which makes now a good time to check who has the better case on TIKR’s numbers.
Loeb made Block a top-10 bet
Third Point’s 13F shows 2.56 million Block shares worth $194 million at quarter-end prices, all of them new in Q2. That’s 4.2% to 5% of the $4.65 billion of U.S. stocks the fund reported, and its 10th-largest position.
Evergreen Quality Fund GP, Ltd. went the other way. Its 13F covers $6.20 billion of US stocks and shows it cut its Block shares by 73% in the quarter, to 499,903 shares worth $38 million.
As of June 30, Block was 0.6% of the fund’s holdings and its 24th-largest holding.
A 13F shows only what a fund held on the quarter’s last day, so neither filing says what either fund paid, or why. And Block closed Friday at $76.27, up 0.3% from its June 30 price, so neither fund has been proven right yet.
TIKR tracks 47 analysts on Block. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Block, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Block’s Analyst Ratings
Block is earning more than it was in June
The case for buying starts with profit. Block’s gross profit rose 25% in Q2 to $3.17 billion. Adjusted operating income reached 27% of gross profit, up from 22% a year before, after Block cut more than 40% of its staff in February.
Analysts have raised their numbers since then. As of June 30, they expected $3.90 of normalized EPS for 2026 and $4.97 for 2027. Now they expect $4.05 and $5.21, rising to $6.48 in 2028:
But the stock hasn’t moved in tandem. At Friday’s close, Block traded at 17x forward earnings, far below its five-year average of 37x:
That average is pulled up by 2021, when the multiple topped 153x. Over the past three years, it has averaged 20x, and its low was 11x in April 2025.
Lending is the catch
The case for selling comes down to Cash App Borrow, Block’s short-term consumer loans. Consumer lending originations grew 59% in Q2.
Block’s transaction, loan, and consumer receivable losses nearly doubled over the same period, to $585 million from $294 million a year before. That’s 18% of gross profit, up from 12%.
Block is setting more aside for future losses, too. Its allowance on consumer loans rose to 14.7% of the book at June 30, from 10.7% at Dec. 31, 2025. Management says 70% of Borrow customers have FICO scores below 580.
Meanwhile, Cash App had 59 million monthly transacting actives in December, March, and June. So its growth has to come from selling more to the same people, credit included.
Morgan Stanley’s James Faucette downgraded Block to Equal Weight on Oct. 28 and cut his target to $80 from $90.
He expects Borrow originations to slow as Block shifts to longer loans, and those longer loans could also push credit losses higher.
And the 2028 estimate is already above the $5.50 of adjusted EPS management laid out at its November 2025 investor day. Block has to beat its own plan to meet it.
Loeb has the better case
Analysts’ average price target has risen over the past year, from $89 to $98:
That’s 29% above Friday’s close, from 47 analysts, with targets running from $75 to $125.
If I had to pick a side, I’d take Loeb’s. At 17x forward earnings, Block trades below its three-year average while analysts expect its EPS to grow 60% from 2026 to 2028, and those estimates have gone up since June.
Even if 2028 lands closer to management’s $5.50, that’s a lot of growth for a below-average multiple.
If losses keep growing faster than the gross profit Borrow earns, February’s margin gains won’t count for much.
Block’s Q3 report in early November is the first test. Management guided to $3.13 billion of gross profit, up 18%, and $875 million of adjusted operating income.
I want to see loss growth well below Q2’s. Then the funds’ next 13Fs, due by Nov. 16, will show whether Loeb added and Evergreen got out by Sept. 30.
So what is Block stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
