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Block Dips 28.1% YTD: Should Investors Buy, Hold or Fold the Stock?
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Key Takeaways
Block shares are down 28.1% YTD amid intensifying competition across digital payments and consumer finance.
Block faces macro pressures, rising wallet rivals and added volatility from its bitcoin-related strategy.
Square posts steady GPV and gross profit gains while Cash App expands with new tools, services and features.
Block (XYZ - Free Report) shares have dropped 28.2% year to date, which can be attributed to intensifying competition in the fintech industry. XYZ stock has not only underperformed its peers, such as Affirm (AFRM - Free Report) and StoneCo Ltd. (STNE - Free Report) , but also underperformed the S&P 500 composite over the same time frame. Year to date, Affirm shares have gained 11.8%, while StoneCo shares have appreciated 86.7%.
Last week, Block announced its Black Friday, Cyber Monday (BFCM) performance results. It showed a growing preference for local spending as Americans focus on neighborhood economies. Over the four-day shopping period, Block processed more than 124 million transactions across Square, Cash App and Afterpay, marking a 10% rise compared with last year.
However, the question arises whether these results are sufficient to gain momentum, or a challenging macroeconomic environment can jeopardize XYZ’s growth tempo. So, here we make a detailed analysis of XYZ to conclude whether it will be prudent enough to buy the stock for now, hold or fold.
Image Source: Zacks Investment Research
What Hinders Block Stock's Performance?
Block faces material headwinds despite its strengths. The company’s performance remains vulnerable to macroeconomic fluctuations and changes in consumer spending patterns. As a result, external forces may play a larger role than internal execution in shaping its trajectory in the upcoming quarters.
Competition in digital payments is intensifying. PayPal continues to command stronger merchant acceptance globally, while Apple Pay and other wallet providers are expanding their reach. In consumer finance, established banks and emerging fintechs are vying for the same demographics that Block target. Maintaining Cash App’s growth trajectory in such a crowded space will require relentless innovation and marketing spend. Moreover, bitcoin remains a meaningful part of Block’s strategy, but it also adds volatility.
What’s Supporting Block’s Progress?
Block is building a powerful fintech ecosystem through its dual growth engines, Square and Cash App. Together, they deliver comprehensive solutions across payments, commerce, banking, investing and lending, positioning XYZ as a one-stop provider for both consumers and businesses. Block is also rapidly expanding its partner base to scale its distribution network. Some recent partnerships concluded by the company include Blackbird Bakery, Grubhub, Caleres, Purdys Chocolatier and Uncle Sharkii Poke Bar.
Square, the part of Block that serves merchants, continues to perform well. Its steady growth in gross payment volume (GPV) and gross profit shows strong business momentum. The company is also rolling out new capabilities, like Square AI, which provides data-driven insights to help sellers manage and grow their businesses in an increasingly competitive point-of-sale (POS) and software landscape. In the UK, Square launched its Cash Advance program to help businesses access funds and further introduced a new portable POS device called Square Handheld. These global expansions are expected to drive Square’s revenue growth going forward.
The main force driving Block’s growth is Cash App, which has become much more than just a way to send money between people. Today, it acts as an all-in-one financial platform, especially popular among younger, digitally native consumers. Cash App now covers a wide range of services, including payments, banking, commerce, and Bitcoin transactions, giving users more ways to manage their money.
The company has also added new tools to make Cash App even more useful—like Cash App Pools for group payments, buy-now-pay-later options through Afterpay and enhanced borrowing features to keep consumers more engaged. In addition, Cash App introduced Tap to Pay on iPhone for businesses, allowing sellers to accept contactless payments easily.
XYZ’s Earnings Estimate Revision Trends Downward
The consensus estimate for Block’s 2025 sales calls for a year-over-year rise of 0.8%, while that for EPS suggests a 28.2% decline year over year. Moreover, EPS estimates have been trending downward over the past month.
Image Source: Zacks Investment Research
XYZ Shares Trade at a Premium
Block shares are overvalued, as suggested by the Value Score of C. In terms of forward 12-month Price/Earnings (P/E), Block is trading at 18.33X, which is at a premium to StoneCo’s 7.46X.
Image Source: Zacks Investment Research
Final Take on Block
Block continues to solidify its position as a leading fintech innovator through its ongoing expansion of its Square and Cash App ecosystems. The company’s product rollout, technological advancements and recent partnerships across Square and Cash App underscore strong execution and a growing ecosystem.
Despite concerns stemming from macroeconomic uncertainty, premium valuation and its downward earnings estimates, Block’s diverse revenue streams, strategic user growth initiatives and continued momentum support a hold position. For now, maintaining a position in XYZ appears wise as the company tackles challenges while unlocking new growth avenues.
Image: Bigstock
Block Dips 28.1% YTD: Should Investors Buy, Hold or Fold the Stock?
Key Takeaways
Block (XYZ - Free Report) shares have dropped 28.2% year to date, which can be attributed to intensifying competition in the fintech industry. XYZ stock has not only underperformed its peers, such as Affirm (AFRM - Free Report) and StoneCo Ltd. (STNE - Free Report) , but also underperformed the S&P 500 composite over the same time frame. Year to date, Affirm shares have gained 11.8%, while StoneCo shares have appreciated 86.7%.
Last week, Block announced its Black Friday, Cyber Monday (BFCM) performance results. It showed a growing preference for local spending as Americans focus on neighborhood economies. Over the four-day shopping period, Block processed more than 124 million transactions across Square, Cash App and Afterpay, marking a 10% rise compared with last year.
However, the question arises whether these results are sufficient to gain momentum, or a challenging macroeconomic environment can jeopardize XYZ’s growth tempo. So, here we make a detailed analysis of XYZ to conclude whether it will be prudent enough to buy the stock for now, hold or fold.
Image Source: Zacks Investment Research
What Hinders Block Stock's Performance?
Block faces material headwinds despite its strengths. The company’s performance remains vulnerable to macroeconomic fluctuations and changes in consumer spending patterns. As a result, external forces may play a larger role than internal execution in shaping its trajectory in the upcoming quarters.
Competition in digital payments is intensifying. PayPal continues to command stronger merchant acceptance globally, while Apple Pay and other wallet providers are expanding their reach. In consumer finance, established banks and emerging fintechs are vying for the same demographics that Block target. Maintaining Cash App’s growth trajectory in such a crowded space will require relentless innovation and marketing spend. Moreover, bitcoin remains a meaningful part of Block’s strategy, but it also adds volatility.
What’s Supporting Block’s Progress?
Block is building a powerful fintech ecosystem through its dual growth engines, Square and Cash App. Together, they deliver comprehensive solutions across payments, commerce, banking, investing and lending, positioning XYZ as a one-stop provider for both consumers and businesses. Block is also rapidly expanding its partner base to scale its distribution network. Some recent partnerships concluded by the company include Blackbird Bakery, Grubhub, Caleres, Purdys Chocolatier and Uncle Sharkii Poke Bar.
Square, the part of Block that serves merchants, continues to perform well. Its steady growth in gross payment volume (GPV) and gross profit shows strong business momentum. The company is also rolling out new capabilities, like Square AI, which provides data-driven insights to help sellers manage and grow their businesses in an increasingly competitive point-of-sale (POS) and software landscape. In the UK, Square launched its Cash Advance program to help businesses access funds and further introduced a new portable POS device called Square Handheld. These global expansions are expected to drive Square’s revenue growth going forward.
The main force driving Block’s growth is Cash App, which has become much more than just a way to send money between people. Today, it acts as an all-in-one financial platform, especially popular among younger, digitally native consumers. Cash App now covers a wide range of services, including payments, banking, commerce, and Bitcoin transactions, giving users more ways to manage their money.
The company has also added new tools to make Cash App even more useful—like Cash App Pools for group payments, buy-now-pay-later options through Afterpay and enhanced borrowing features to keep consumers more engaged. In addition, Cash App introduced Tap to Pay on iPhone for businesses, allowing sellers to accept contactless payments easily.
XYZ’s Earnings Estimate Revision Trends Downward
The consensus estimate for Block’s 2025 sales calls for a year-over-year rise of 0.8%, while that for EPS suggests a 28.2% decline year over year. Moreover, EPS estimates have been trending downward over the past month.
Image Source: Zacks Investment Research
XYZ Shares Trade at a Premium
Block shares are overvalued, as suggested by the Value Score of C. In terms of forward 12-month Price/Earnings (P/E), Block is trading at 18.33X, which is at a premium to StoneCo’s 7.46X.
Image Source: Zacks Investment Research
Final Take on Block
Block continues to solidify its position as a leading fintech innovator through its ongoing expansion of its Square and Cash App ecosystems. The company’s product rollout, technological advancements and recent partnerships across Square and Cash App underscore strong execution and a growing ecosystem.
Despite concerns stemming from macroeconomic uncertainty, premium valuation and its downward earnings estimates, Block’s diverse revenue streams, strategic user growth initiatives and continued momentum support a hold position. For now, maintaining a position in XYZ appears wise as the company tackles challenges while unlocking new growth avenues.
At present, Block carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.