Block Shares Plunge Following Disappointing Quarterly Results

Block's latest earnings report sent its stock tumbling as the financial technology company delivered results that fell short of market expectations across key metrics. The third quarter 2025 performance revealed significant challenges in the company's core business operations despite some bright spots in its consumer-facing division.

The company reported adjusted earnings per share of $0.54, substantially below the $0.68 consensus estimate among market analysts. Revenue also disappointed, with net sales reaching $6.11 billion against higher projections. The immediate market reaction was severe, with shares declining nearly 10% following the announcement.

Under generally accepted accounting principles, Block recorded net income of $284 million, approximately $50 million lower than anticipated. This substantial earnings miss highlighted underlying operational challenges that extend beyond surface-level performance metrics.

Square Division Faces Margin Pressure

The most significant concerns emerged from Block's Square business unit, where a troubling divergence appeared between payment volume growth and profitability. While payment processing volume increased 12% to $67.2 billion, gross profit only advanced by 9%. This discrepancy cost the company approximately 260 basis points in gross profit margin during the quarter.

Company leadership indicated this margin compression will likely persist through the second quarter of 2026, attributing the issue to revised terms within a key processing partnership. Simultaneously, operating expenses climbed 16.9% to $2.25 billion, creating additional pressure on overall profitability.

Should investors sell immediately? Or is it worth buying Block?

Cash App Emerges as Growth Engine

In contrast to Square's struggles, Block's Cash App division delivered impressive results. The peer-to-peer payment service saw its gross profit surge 24%, representing a notable acceleration from the previous quarter's performance. With 58 million monthly active users and expanding product offerings including teen-oriented savings accounts, Cash App demonstrates where Block's most promising growth opportunities lie.

Management responded to the mixed quarterly results by raising full-year guidance. The company now anticipates 2025 gross profit of $10.243 billion, representing growth exceeding 15%.

Market Analysts Maintain Confidence

Despite the quarterly setback, numerous financial analysts have reaffirmed their positive ratings on Block shares. The average price target among covering firms stands at $82.58, with some institutions suggesting the stock could reach $105. Jefferies maintained its buy recommendation with a $90 price target.

Looking ahead, Block projects fourth-quarter gross profit growth will accelerate beyond 19%. The company is also approaching the "Rule of 40" threshold—an important software industry benchmark balancing growth and profitability.

All attention now turns to November 19th, when Block will host its Investor Day to detail long-term strategic initiatives. The central question for investors remains whether the recent stock decline represents a market overreaction or signals more fundamental concerns within the company's operations.