Block Dips 31% YTD: Should Investors Hold or Fold the Stock?

Block XYZ shares have dropped 31% year to date (YTD), which can be attributed to intensifying competition in the fintech industry. A challenging macroeconomic environment with growing risk of a recession attributed to U.S. President Donald Trump’s plan to levy tariffs on trade partners China, Canada and Mexico is expected to be an overhang on the stock.

Block shares have declined 68.1% since hitting a 52-week high of $99.26 on Dec. 5, 2024. Over the trailing 12-month period, XYZ shares fell 31.4%, underperforming close competitors such as PayPal PYPL, Affirm AFRM and Shopify SHOP. Shares of PayPal, Affirm and Shopify have appreciated 3%, 26.8% and 31.3%, respectively, over the same timeframe. Year to date, PayPal, Affirm and Shopify shares have dropped 18.7%, 22.4% and 4.8%, respectively.

XYZ Stock’s Performance

So, what should investors do with the XYZ stock?

Block’s Top Line to Ride on Strong Portfolio

Block is benefiting from an expanding product portfolio and continuing go-to-market initiatives. XYZ invested significantly in marketing initiatives in the second half of 2024, which, along with a rich partner base and robust field sales strategies, are expected to drive growth in 2025.

Block expects year-over-year gross profit growth of at least 15% despite a headwind of 50 basis points (bps) from unfavorable forex. Adjusted operating profit is expected to be $2.1 billion or a margin of 21% on gross profit, suggesting 240 bps year-over-year expansion. XYZ expects to exit 2025 at a Rule of 40 run rate and remain on track to achieve the targeted Rule of 40 in 2026. 

XYZ’s comprehensive commerce ecosystem, which enables sellers to combine software, hardware and payment services to accept payments from customers, helps it sustain solid momentum across sellers. The company’s omnichannel offerings, which help sellers create differentiated customer experiences on the back of customer insights by managing orders from point-of-sale (POS) and eliminating manual aggregation of online and in-person orders, are adding strength to its seller base.

These factors drove Block’s Gross Payment Volume, which increased 7.8% year over year to $61.95 billion. The Buy Now Pay Later (BNPL) platform grew 19% year over year to $10.3 billion in Gross Merchandise Value, driven by the Pay-in-Four offering’s strong volume growth and gift cards.

Rich Partner Base Aids XYZ Stock’s Prospects

Block’s strong positioning in the digital payments industry on the back of its robust payment and POS solutions is a notable driver. In 2024, the company’s partnership team surpassed expectations for lead generation and volume. The average expected seller volume for partner-driven leads exceeded $1 million in the fourth quarter, meaningfully larger than XYZ’s existing base.

The company is investing aggressively in expanding its partner base, aiming to scale its distribution network. Its partnership with Sysco, a leading global foodservice distributor, is expected to help food and beverage sellers operate more smoothly. Apart from the foodservice domain, XYZ is leveraging partnerships to expand in the BNPL market.

XYZ’s Cash App and Lyft inked a partnership to bring a customer-friendly payment method to the latter’s customers. Cash App’s partnership with Google Play offers a preferred alternative payment option when checking out on their Android smartphones or tablets.

XYZ’s Earnings Estimates Revision Trends Northward

The Zacks Consensus Estimate for 2025 earnings is pegged at $3.95 per share, up 1.5% over the past 30 days. The figure suggests 17.21% growth over the 2024 reported figure of $3.37 per share.

The consensus estimate for first-quarter 2025 earnings is pegged at 84 cents per share, up 3.7% over the past 30 days. The figure indicates a 1.18% year-over-year decline.

XYZ’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing in one and matching in the remaining one, the average surprise being 11.25%.
 

Block, Inc. Price and Consensus

Block, Inc. price-consensus-chart | Block, Inc. Quote

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

XYZ Stock: Hold or Fold?

While Block’s rich partner base and expanding portfolio are noteworthy for investors, it suffers from challenging macroeconomic conditions, unfavorable forex and intensifying competition. Block’s Cash App is facing stiff competition in the BNPL domain from Affirm. PayPal’s plan to monetize products, including Braintree and Venmo, further intensifies competition for Block.

Block’s current valuation is stretched, as suggested by the Value Score of C. 

XYZ shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

XYZ Trades Below 50-day & 200-day SMAs

XYZ currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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