Block, Inc. (XYZ): A Bull Case Theory

Tue, Sep 16, 2025, 12:02 PM 3 min read

We came across a bullish thesis on Block, Inc. on Bob’s Payment Stock Substack by Bob Hammel. In this article, we will summarize the bulls’ thesis on XYZ. Block, Inc. 's share was trading at $75.82 as of September 8th. XYZ’s trailing and forward P/E were 16.20 and 20.33 respectively according to Yahoo Finance.

Despite a disappointing Q1 that saw Block reduce full-year guidance, shares rallied nearly 75% from post-earnings lows, fueled by positive Cash App inflows, well-received Square and Cash App product launches, improving Bitcoin sentiment, and the announcement of Block’s inclusion in the S&P 500. Strong Q2 results reinforced this momentum, with gross profit growth accelerating to 14%, adjusted operating margins expanding to nearly 22%, and Block raising 2025 guidance to 14.4% gross profit growth and 20% operating margin.

Square showed encouraging signs, with U.S. GPV growth rebounding to 7%, outpacing the broader market, while international GPV surged 24%, resulting in global growth of roughly 10%. Growth was broad-based, notably in food and beverage and retail, signaling a return to market share gains. However, gross profit expansion was moderated by higher processing costs, hardware investments, and possible lower take rates from upmarket success, suggesting Square’s growth comes with margin trade-offs.

Cash App’s performance painted a more nuanced picture: while Borrow and BNPL originations rose sharply, underlying spending-driven gross profit growth remained modest at 7%, reflecting slower Cash App Card MAU growth. This dynamic implies that future earnings will increasingly rely on lending rather than spending, with Cash App Borrow originations projected to rise from $4.5 billion in Q2 to over $7 billion by Q4 2025.

Looking ahead to 2026, consolidated gross profit is modeled to grow 15% with a 22% adjusted operating margin and EPS of $3.09. Despite valuation appearing reasonable at sub-24x 2026 EPS, Block’s upside hinges on a rebound in spending-driven gross profit. Lending expansion risks, margin pressures, and MAU growth uncertainty suggest caution, and while Square is regaining market share, the reliance on lending tempers enthusiasm for the stock relative to other FinTech opportunities.

Previously we covered a bullish thesis on Block, Inc. (XYZ) by Long-Term Pick in March 2025, which highlighted strong growth across Square and Cash App, margin expansion, and free cash flow improvement driven by AI, Bitcoin, and open-source initiatives. The company's stock price has appreciated approximately by 16.11% since our coverage. The thesis still stands as Block continues to expand Cash App Borrow and Square GPV. Bob Hammel shares a similar thesis but emphasizes recent Q1 and Q2 results and margin dynamics.