Block Stock Plummets 12% After Weak Earnings and Guidance – What’s Next for Investors?

Published on: 21 February 2025

Block Stock Key Takeaways

Weak Q4 Earnings: Block missed Q4 EPS and revenue estimates, leading to a 12% drop in SQ shares.
2025 Outlook: CEO Jack Dorsey remains optimistic about Block’s growth potential in 2025.
Analyst Sentiment: Analysts have mixed views, with Jefferies maintaining a Buy rating but expressing caution about growth projections.
Long-Term Potential: Block’s focus on innovation and operational efficiency could drive future growth.

Block Stock (SQ), the parent company of Square and Cash App, saw its shares drop by 12% on Friday after reporting weaker-than-expected Q4 earnings and guidance. The company cited a slowdown in consumer spending as a key factor behind the miss, raising concerns among investors. Despite the disappointing results, CEO Jack Dorsey remains optimistic about Block’s long-term growth potential.

Block Stock Q4 Earnings: Key Highlights

Block Stock reported adjusted earnings per share (EPS) of $0.71 for Q4, falling short of the $0.90 expected by analysts surveyed by Visible Alpha. Revenue grew by 4.5% year-over-year to $6.03 billion but missed the consensus estimate of $6.32 billion

The company attributed the weaker performance to a challenging macroeconomic environment, which has led to reduced consumer spending. However, Block Stock gross profit for the full year is projected to reach $10.22 billion, slightly below the Visible Alpha estimate of $10.30 billion.

CEO Jack Dorsey’s Optimistic Outlook

In a statement, CEO Jack Dorsey emphasized that Block has made significant organizational changes in 2024 to position itself for faster growth. “We’ve taken a hard look at our organization and made changes to enable us to build much faster,” Dorsey said. He added that most of the work is now complete, setting the stage for a strong financial outlook in 2025.

Dorsey’s confidence in Block’s future stems from the company’s ability to adapt to changing market conditions and its focus on innovation. He expects momentum to build throughout 2025, driven by improved operational efficiency and new growth opportunities.

Analyst Reactions: Mixed Sentiments

Jefferies’ Perspective:
Jefferies, which maintains a Buy rating on Block’s stock, described 2025 as a “now or never” year for the company. While acknowledging some skepticism about the size of the projected business acceleration, Jefferies expressed relief over management’s confidence in having “clear visibility” into key growth drivers.
Market Concerns:
Despite the optimistic outlook, investors remain cautious due to Block’s recent underperformance and the broader economic challenges impacting consumer spending. The 12% drop in SQ shares reflects these concerns, even though the stock is still up approximately 11% compared to last year.

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