Key Takeaways
- Block’s fourth-quarter earnings and revenue fell short of Wall Street estimates, causing the stock to drop.
- Despite the missed earnings, management remains optimistic about growth, with new product launches and expanded financial services.
- Block invests heavily in Bitcoin, developing an open mining system and manufacturing mining chips.
Block’s fourth-quarter earnings and revenue missed Wall Street expectations.
Despite the miss, management is optimistic, highlighting new product launches and the integration of Afterpay into Cash App to boost engagement and revenue.
Long-term projections appear favorable, with the stock potentially reaching $364 by 2036 and some forecasts even predicting a more substantial rise.
Block Earnings Missed Wall Street Expectations
Block (XYZ) reported fourth-quarter earnings and revenue that missed Wall Street estimates .
For the three-month period ending Dec. 31, adjusted earnings rose 51% to 71 cents per share, below analyst expectations of 88 cents. Net revenue increased 4% to $6.032 billion, falling short of the $6.295 billion forecast, including Cash App Bitcoin transactions.
Gross profit, a key metric, climbed 14% to $2.31 billion, slightly missing estimates of $2.33 billion. Cost-cutting boosted EBITDA to $757 million, beating the $740 million projection.
Meanwhile, gross payment volume from merchant transactions grew 10% to $61.95 billion, surpassing the expected $61.4 billion ..
Block’s gross payment volume outperformed expectations despite a slight gross profit miss due to softer Cash App growth.
Block Management Remains Confident
Although the results didn’t match analysts’ expectations, Block’s management is confident that the future is bright, in part due to the launch of new products. The company has expanded beyond point-of-sale payments into lending and financial services.
After acquiring Afterpay for $29 billion in 2021, it integrated the service into Cash App and Square. The rollout of Afterpay on the Cash App card begins this week.
Block CFO Amrita Ahuja said that the latest product launch aims to expand credit options and position Cash App as a banking alternative.
CEO Jack Dorsey emphasized that integrating services like Cash App and Afterpay boosts spending and engagement, leveraging the app’s large user base for quick adoption.
Analysts see lending as a key revenue driver alongside merchant services and advertising. Cash App recorded $1.38 billion in gross profit, a 16% year-over-year increase, beating expectations.
Dorsey outlined a long-term vision of merging Cash App and Square into a unified financial ecosystem, reducing the need for multiple apps.
Block is also deepening its Bitcoin investment by developing an open mining system called Proto.
Dorsey said Block is manufacturing mining chips and aims to make Bitcoin mining more accessible. He predicts significant market impact, calling 2024 a year of “unexpected upside.”
Jefferies analyst Trevor Williams noted that the company’s 2025 guidance for 15%-plus growth remains intact but will require a steeper ramp-up.
BofA Cuts XYZ Target Price Before Q1 Earnings
Bank of America (BofA) has lowered its price target for Block to $80 from $94, while maintaining a ‘Buy’ rating.
For 2025, BofA cut its Gross Payment Volume (GPV) growth estimate to 6.8%, below the market’s 10% expectation. Gross profit growth is forecast at 13%, under both the 15% market consensus and the company’s guidance of “at least” 15%.
Analysts are watching closely, as Block’s outlook relies heavily on the second half of the year.
According to 40 analysts , the average one-year target price for Block is $100.64 (high: $125.00; low: $57.00), implying an 87.23% upside from the current $53.75. The average brokerage recommendation from 45 firms is 2.0 (“Outperform”).
GuruFocus estimates Block’s one-year GF Value at $90.86, suggesting a 69.04% upside from $53.75.
Where Will XYZ Stock Be In Five Years?
Block’s stock should grow steadily over the next five years, rising from $53.83 today to $176.66 by the end of 2027, reflecting a 113% potential increase.
By the end of 2025, the stock should reach $90.14, marking a 67% year-over-year gain. The stock should continue climbing, hitting $138.81 by the end of 2026, a 67% increase from today’s price.
From 2027 to 2031, Block’s value will likely more than double, moving from $138.81 at the start of 2027 to $289.15 by the end of 2031. This growth will likely stem from expanding financial services, Afterpay integration, and greater involvement in cryptocurrency.
From 2032 to 2036, Block stock should reach $364.26, a 338% increase from current levels.
The company’s expansion into Bitcoin mining, digital payment solutions, and broader financial services will drive long-term growth.
According to TipRanks , Wall Street analysts maintain a ‘moderate buy’ consensus, with 27 out of 31 recommending a “Buy”.
Some projections suggest an even more aggressive trajectory, with the stock potentially hitting $687.95 by December 2030, implying a 957% return.
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