Block Shares Sink Most in Almost Five Years on Earnings Miss
(Bloomberg) — Block Inc. shares sank the most in almost five years after the digital-payments company posted fourth-quarter profit and revenue that fell short of analysts’ forecasts.
The stock fell almost 18% to $68.35, the steepest decline on a closing basis since March 2020. The shares had risen about 26% in the 12 months through Thursday.
Revenue at the provider of the money-transfer service Cash App rose to $6.03 billion, less than the $6.28 billion average estimate of analysts surveyed by Bloomberg. Net income surged to $1.95 billion, or $3.05 a share, from $102 million, or 16 cents, in the year-earlier period, the company said in a statement after the close of trading on Thursday. Adjusted earnings were 71 cents, versus an analyst estimate of 89 cents.
While there were some bright spots in the quarter, the unchanged gross profit guidance — calling for an increase at least 15% in 2025 — and relatively flat growth of Cash App monthly active users was a negative, Mizuho Securities analyst Dan Dolev said. He has an “outperform” rating on the shares.
“The issue is it was just okay,” Dolev said. “In this market, people want more than okay. People want to see the old days where things were like, wow.”
As of December, 2.5 million of Cash App’s 57 million active users signed on to deposit their paychecks directly into the app, up 25% year over year. The uptick in direct deposit customers followed increased marketing spending throughout the second half of 2024 as Block attempts to execute on its “bank our base” strategy.
Active users of the Cash App card increased to 25 million in the most recent quarter, from 24 million in third quarter. Afterpay, Block’s buy now, pay later offering, will be available more widely through the Cash App card in the coming weeks. In the past year, Block originated $150 million worth of loans while testing the integration, Block Chief Financial Officer Amrita Ahuja said in an interview with Bloomberg.
Cash App’s Bitcoin revenue was $2.4 billion for the quarter, below an analyst estimate of $2.63 billion.
In January, Block settled with the US Consumer Financial Protection Bureau and nearly all of its state money transmitter license regulators. The CFPB ordered Block pay at least $75 million in redress to consumers and $55 million in civil money penalties after stating that Block failed to provide effective customer service to Cash App customers and failed to effectively address fraud on the platform. The firm is continuing negotiations with one of its regulators, the New York Department of Financial Services.
Block, also known for its payments terminal Square, competes with PayPal and Stripe.
(Updates with closing share price)
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