Should You Hold Onto XYZ Stock in 2025 Beyond Its 19% QTD Growth?

Block’s (XYZ) solid 19.8% quarter-to-date (QTD) return has left many investors questioning whether it remains attractively valued or if a better entry opportunity lies ahead. XYZ stock has not only outpaced its peers, such as PayPal Holdings, Inc. PYPL and Shopify Inc. SHOP, but also outperformed the S&P 500 composite over the same time frame. QTD, PayPal shares have gained 12.1%, while Shopify shares have appreciated 17%.

There has been a spate of positive news of late for Block, including the launch of Square Handheld in the United Kingdom, the official partnership of Square and Live Nation Canada for extension of seamless commerce to Rogers Stadium and beyond, teaming up of Cash App and WNBA All-Star Angel Reese as well as its partnership with Bambu Dessert Drinks to streamline and centralize operations.

However, the question arises whether these developments are sufficient to keep the 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 hold the stock for now, or accumulate more shares, or discard and book profits.

What’s Driving Block Stock's Performance?

Block is building a powerful fintech ecosystem through its dual growth engines, Square and Cash App. These platforms offer comprehensive solutions that span payments, commerce, banking, and lending, positioning Block as a one-stop provider for both consumers and businesses. The latest innovations like the Square Point of Sale app and the rollout of “Cash App Afterpay” showcase its commitment to user-centric design and revenue diversification.

Square is steadily reclaiming market share, supported by a 9% year-over-year increase in gross profit and an 8.2% rise in gross payment volume on a constant currency basis. These gains highlight Block’s successful execution on product innovation and its targeted go-to-market approach, which includes expanding field sales, onboarding larger sellers, and deepening strategic partnerships.

Despite shifting spending patterns, Cash App is poised for meaningful network expansion. Block is prioritizing user growth among teens and families, while accelerating the rollout of Cash App Borrow following FDIC approval for nationwide lending — a move that’s expected to significantly expand eligibility and enhance unit economics beginning in the third quarter of 2025.

At the same time, Block is tapping into new revenue opportunities. The “Cash App Afterpay,” a retroactive buy-now-pay-later product, launched earlier this year, is already showing strong early adoption. Additionally, Block’s Proto division is preparing to enter the Bitcoin mining space, with plans to release custom chips and systems in the second half of 2025, a strategic push into the broader digital asset infrastructure market.

What Hinders Block's Progress?

Although Block continues to roll out new features and expand its ecosystem, it faces several challenges. Economic headwinds, such as trade tariffs and subdued discretionary spending in areas like travel and media, are dampening activity on the Cash App Card. Its gross profit is forecasted to improve later in the year, but the near-term softness is noticeable.  Moreover, the company is contending with stiff competition from established players like PayPal and Shopify, as well as a growing wave of fintech disruptors.

Despite its broad-based growth and diverse revenue streams, Block’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 2025.

XYZ’s Earnings Estimates Revision Trends Southward

The Zacks Consensus Estimate for Block’s 2025 sales and EPS implies year-over-year growth of 3.5% and a decline of 27%, respectively. EPS estimates for 2025 and 2026 have been southbound over the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

XYZ Shares Trade at a Premium

Block shares are overvalued, as suggested by the Value Score of D.

In terms of forward 12-month Price/Earnings (P/E), Block is trading at 22.17X compared with PayPal’s 13.66X.

Final Take on Block

Block continues to strengthen its position as a leading fintech innovator through its expanding Square and Cash App ecosystems. Recent partnerships, product rollouts, and innovation across Square and Cash App highlight the company’s strong execution and growing ecosystem. Initiatives like Cash App Borrow, Afterpay integration, and expansion into Bitcoin mining signal long-term potential. 

While macroeconomic uncertainty and premium valuation raise caution, Block’s diversified revenue base, user growth strategies, and continued momentum justify holding the stock. For now, maintaining a position in XYZ seems prudent as it navigates 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.

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

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