Key Takeaways:
- Block (XYZ) beat Q1 2026 estimates with adjusted EBITDA of $1,000 million versus the $947 million consensus estimate. Adjusted EPS rose 52% year-over-year to $0.85.
- XYZ stock trades at around $72, roughly 13% below its 52-week high of $83. Analysts have a consensus target price of around $90.
- XYZ stock could rise from $72 to around $109 per share by December 2028. That implies a total return of around 52% and an annualized return of around 17%.
What Happened?
Block, Inc. (XYZ) reported strong Q1 2026 results on May 7, 2026. Adjusted EBITDA reached $1,000 million, beating the $947 million analyst estimate by a meaningful margin. Adjusted EPS rose 52% year-over-year to $0.85. And Block raised its annual gross profit outlook following the strong quarterly performance.
Square provides payment processing, point-of-sale hardware, and business management software to merchants across restaurants, retail, and service industries. Cash App is a consumer financial services platform for peer-to-peer payments, stock investing, and Bitcoin transactions.
Cash App Borrow is Block’s consumer lending product, and its origination volume surged 223% year-over-year to $18.5 billion in Q4 2025. So both platforms are demonstrating meaningful operational momentum.
CEO Jack Dorsey announced plans to cut over 4,000 jobs in early 2026 as part of an AI-driven restructuring effort. But investor reaction was broadly positive, with shares surging on the news.
Truist upgraded XYZ to “buy” in March 2026, citing strong fundamental improvement in the business. And Block expanded its Uber partnership in April 2026, bringing Cash App Pay to the Uber platform across the U.S.
Block’s Q4 2025 results also showed encouraging profitability, with adjusted EBITDA of $930 million beating the $915 million estimate. So execution has been consistent across multiple quarters. And the Cash App and Square platforms are scaling profitability together.
Here’s why Block stock could deliver strong returns through 2028 as its AI-driven cost structure and platform profitability continue improving.
What the Model Says for XYZ Stock
We analyzed the upside potential for Block stock based on its improving gross profit margins, Cash App’s expanding financial services suite, and Square’s growing software and payment volume across a broad merchant base.
Based on estimates of around 11% annual revenue growth, around 13% operating margins, and a normalized P/E multiple of around 17x, the model projects Block stock could rise from $72 to around $109 per share.
That would be a total return of around 52%, or around 17% annualized over the next 2.6 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for XYZ stock:
1. Revenue Growth: 10.8%
Block reported Q1 2026 adjusted EBITDA of $1,000 million, beating estimates, and raised its annual gross profit outlook. Cash App Borrow origination volume rose 223% year-over-year to $18.5 billion in Q4 2025. And Square continues adding merchants through new partnerships and ongoing platform improvements.
Based on analysts’ consensus estimates, we used around 11% annual revenue growth. This reflects Block’s recovering gross profit trajectory, growing Cash App financial services revenue, and Square’s steady merchant base expansion. And the company’s forward two-year revenue CAGR of around 10% provides close alignment with this assumption.
So 11% is a reasonable and achievable target for Block over the next few years. And new initiatives like Cash App Borrow and the Uber payment partnership could provide incremental upside to base-case assumptions. The gross profit focus under Dorsey’s leadership also adds further visibility to the path forward.
2. Operating Margins: 13%
Block’s last-twelve-month EBIT margin is around 5%, and gross margins are around 45%. Margins have been rising as the company reduces costs through AI-driven restructuring. And the 4,000-plus job cuts announced in early 2026 should structurally lower operating expenses on a sustained basis.
Based on analysts’ consensus estimates, we used around 13% operating margins. This reflects Block’s improving cost structure following aggressive workforce reductions and AI-enabled automation. And it assumes Cash App’s financial services revenue continues growing as a higher-margin segment within the overall business mix.
Block’s net debt to EBITDA ratio is a modest 0.49x, reflecting a healthy and flexible balance sheet. So the company can continue investing in product development without financial strain. And as AI reduces headcount-related costs, reaching 13% margins becomes more achievable on a sustained and durable basis.
3. Exit P/E Multiple: 17.2x
Block currently trades at a next-twelve-months P/E of around 17x. This is modest for a high-growth fintech company with strong platform network effects. But Block’s recent revenue dynamics and historical earnings volatility have kept the multiple below peers. And the market is still recalibrating to the company’s evolving, more profitable business model.
Based on analysts’ consensus estimates, we maintained a normalized P/E multiple of around 17x. This reflects Block’s unique combination of consumer finance, merchant tools, and Bitcoin ecosystem exposure. And it incorporates some uncertainty around Cash App’s growth trajectory and the competitive intensity in consumer payments.
The current multiple provides meaningful room for expansion if Block demonstrates consistent profitability improvement. So if margins reach 13% and revenue growth holds around 11%, multiple re-rating becomes a significant additional upside driver. And analyst upgrades like Truist’s “buy” rating signal growing market confidence in the business.
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What Happens If Things Go Better or Worse?
Different scenarios for XYZ stock through 2034 show varied outcomes based on Cash App growth, Square merchant expansion, and operating margin improvement (these are estimates, not guaranteed returns):
- Low Case: Revenue growth remains muted and margin improvement stalls amid intense competitive pressure in consumer payments → around 9% annual returns
- Mid Case: Cash App and Square sustain steady growth as AI-driven cost cuts deliver consistent margin improvement → around 12% annual returns
- High Case: Cash App financial services scale faster than expected, and margins reach the higher end of the guidance range → around 15% annual returns
Going forward, Block’s success will depend on whether Jack Dorsey’s AI-driven restructuring translates into durable margin improvement alongside consistent revenue recovery. The Q1 2026 results show the profitability thesis is working, with adjusted EBITDA beating estimates significantly.
And if Block can sustain the around 17% annual return trajectory implied by the guided model through 2028, the stock remains one of the more attractively priced fintech names at current prices relative to its earnings potential.
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Should You Invest in Block?
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, 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 XYZ alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
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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!
