Block Shares Crash On Cash App Miss: Analyst Says 'Not An Investable Story'

Core Viewpoint - Block Inc's shares have significantly declined following the announcement of disappointing first-quarter results, which have raised concerns among analysts regarding the company's performance and future guidance [1][18]. Group 1: Analyst Ratings and Revisions - Analyst Mark Palmer downgraded Block's rating from Buy to Hold, citing Cash App's gross profits of $1.38 billion, which fell short of the $1.42 billion estimate, contributing to overall shortfalls [2]. - KeyBanc Capital Markets' analyst Alex Markgraff maintained an Overweight rating but reduced the price target from $65 to $60, noting that Block's adjusted EBITDA of $812.8 million missed the consensus of $783.4 million [4]. - RBC Capital Markets' analyst Daniel Perlin reiterated an Outperform rating while lowering the price target from $86 to $63, highlighting a 32% year-on-year decline in Cash App's GPV to $2.7 billion, which missed expectations [6]. Group 2: Financial Performance and Guidance - Block reported a gross payment volume (GPV) of $54.1 billion, which was below the consensus estimate of $58 billion, and adjusted earnings of 56 cents per share, missing the consensus of 97 cents [2]. - Management has revised their full-year guidance lower, reflecting a more cautious macroeconomic outlook, although they still expect gross profit growth to accelerate in the latter half of the year [5][9]. - Cash App's gross profit growth decelerated to 10% year-on-year in Q1, down from 16% in the previous quarter, and the company lowered its 2025 gross profit projection to $9.9 billion from $10.22 billion [13][14]. Group 3: Market Reactions and Future Outlook - Shares of Block declined by 19.70% to $46.96 following the earnings announcement, indicating a negative market reaction to the results [18]. - Analysts expressed concerns about the overall growth trajectory of both Cash App and Square, with some suggesting that the current macro environment may continue to exert pressure on the company's performance [17][11].