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

Group 1 - Block, Inc.'s share price was $75.82 as of September 8th, with trailing and forward P/E ratios of 16.20 and 20.33 respectively [1] - Following a disappointing Q1, Block's shares rallied nearly 75% from post-earnings lows, driven by positive Cash App inflows, successful product launches, and inclusion in the S&P 500 [2] - Strong Q2 results showed gross profit growth accelerating to 14% and adjusted operating margins expanding to nearly 22%, with 2025 guidance raised to 14.4% gross profit growth and 20% operating margin [2] Group 2 - Square's U.S. GPV growth rebounded to 7%, while international GPV surged 24%, leading to a global growth rate of approximately 10% [3] - Growth was broad-based, particularly in food and beverage and retail sectors, indicating a return to market share gains, although gross profit expansion faced challenges from higher processing costs and hardware investments [3] - Cash App's performance showed a modest gross profit growth of 7%, with a significant rise in Borrow and BNPL originations, suggesting future earnings may increasingly depend on lending [4] Group 3 - Consolidated gross profit is projected to grow 15% by 2026, with an adjusted operating margin of 22% and EPS of $3.09 [5] - Despite a reasonable valuation at sub-24x 2026 EPS, Block's potential upside is contingent on a rebound in spending-driven gross profit [5] - The reliance on lending for growth, alongside margin pressures and MAU growth uncertainty, tempers enthusiasm for Block's stock compared to other FinTech opportunities [5] Group 4 - Previous bullish thesis on Block highlighted strong growth in Square and Cash App, margin expansion, and free cash flow improvement, with the stock price appreciating approximately 16.11% since coverage [6] - The current thesis emphasizes recent Q1 and Q2 results and margin dynamics, aligning with the positive outlook on Cash App Borrow and Square GPV [6]