Behind the 28% YTD decline in Block: Does this fintech giant still have a chance?

Block (XYZ) has seen its stock price decline by 28.2% year-to-date, making it a laggard among its peers. In comparison, competitor Affirm has gained 11.8% this year, while StoneCo has surged by 86.7%. During the same period, the S&P 500 has significantly outperformed Block. What does this reflect? Should investors now enter, hold, or exit?

External pressures are intensifying

The challenges facing Block are not to be underestimated. First is macroeconomic uncertainty. As a company highly sensitive to consumer spending, any fluctuations in the economic environment will directly impact its growth trajectory.

Second, competition in the payments sector is heating up. PayPal still holds the advantage of the world’s strongest merchant network, while wallet applications like Apple Pay continue to expand their territory. In consumer finance, traditional banks and emerging fintechs are competing for the customer base covered by Block. This means that to maintain growth, Cash App must invest more in innovation and marketing.

Another hidden risk is Bitcoin. While Bitcoin is an important part of Block’s strategy, it also introduces significant volatility risk.

Financial data also confirms market concerns. The sales growth forecast for 2025 is only 0.8% YTD growth, and EPS is expected to decline by 28.2%. Analysts have been continuously lowering earnings estimates over the past month, which is a warning sign. Additionally, Block’s valuation carries a premium risk — the current 12-month forward P/E is 18.33X, significantly higher than StoneCo’s 7.46X.

But growth engines are still running

However, the situation isn’t as bleak as it seems. Block is building a complete ecosystem through its two major platforms, Square and Cash App.

Square continues to exert strength. Gross Payment Volume (GPV) and gross profit are maintaining steady growth, and merchant business performance remains solid. The company recently launched Square AI to help sellers optimize their business using data-driven methods. In the UK market, Square has also introduced cash advance plans and launched portable POS devices like Square Handheld, which are expected to boost future revenue.

Cash App is the real growth engine. It has long been more than just a transfer tool; it is a comprehensive financial platform, especially attractive to young, digital-native users. Payments, banking, e-commerce, Bitcoin trading — Cash App covers all aspects of users’ daily financial needs. Recently, new features such as group transfers, buy now pay later (integrated with Afterpay), lending tools, and Tap to Pay on iPhone have been introduced, making contactless payments even more convenient for merchants.

Data also supports this optimism: last week, Block released its Black Friday and Cyber Monday (BFCM) performance report, showing that American consumers are more inclined to shop locally. During this shopping season, platforms under Block processed 124 million transactions, a 10% year-over-year increase. This indicates that business resilience remains intact.

Recent partner expansions also send positive signals — brands like Blackbird Bakery, Grubhub, Caleres, and Purdys Chocolatier have joined, providing new possibilities for expanding Block’s distribution network.

The current choice

The contradictions facing Block are clear: on one hand, high short-term valuation and downward earnings revisions; on the other, a well-developed ecosystem, a solid user base, and continuous new product releases.

In this situation, holding and observing seems to be the more rational choice. There’s no need to rush into chasing highs, but there’s also no need to cut and run. Block is transitioning from rapid growth to refined operations, and new growth points are gradually validating the resilience of its business model. Give it some time for the market to reprice this fintech innovator’s true value.

Currently, Block holds a Zacks rating of #3 (Hold).