Block’s strengthening position in short-duration, high-velocity consumer credit is becoming a key driver of its long-term outlook, according to a new note from William Blair, which argues the fintech is well-placed as on-demand liquidity tools become central to digital finance.
The firm reiterated an Outperform rating and said Block’s risk/reward remains attractive, pointing to accelerating gross profit growth, margin expansion, and rising adoption of Cash App’s borrowing features.
Analysts Andrew W. Jeffrey and Adib Choudhury say Cash App’s Borrow feature, which grew 134% from a year ago, is likely to stay a key growth driver as more consumers look for small, short-term loans they can access instantly, something traditional banks don’t offer.
They added that the product’s quick four-week payback window and Block’s data-driven lending models help keep losses under 3% while still generating strong returns.
Square, Block’s merchant payments and point-of-sale business, is starting to regain momentum as it adds more distribution partners and rolls out updated lending models for small businesses.
Some investors have been concerned that the amount of money flowing through Square’s systems has been growing faster than the profit it generates. William Blair expects that gap to shrink as the new credit models take hold.
Cash App’s crypto features are expanding as well. The platform added support last week for bitcoin and stablecoin payments, including Lightning transactions that customers can make even without holding BTC by paying directly from their USD balance.
Users can now send and receive stablecoins, and Square merchants can choose to accept or settle in either dollars or bitcoin, extending the link between Block’s consumer app and its merchant network.
The research note comes after Block reported $6.11 billion in third-quarter revenue earlier this month, including nearly $2 billion from its bitcoin services — roughly a third of total revenue.
Gross profit rose 18% year over year, though adjusted operating income and EBITDA missed consensus, pushing shares down nearly 10% after hours. Block held 8,780 BTC at quarter’s end and recorded a $59 million negative impairment loss on its holdings.
Despite uneven Q3 metrics, William Blair said Block remains undervalued relative to peers and expects more than 40% upside over the next year.
Block shares (ticker XYZ) have continued their three-week slide, trading just above $58 today — down more than 27% from last month, when the stock briefly traded below $80, according to The Block's price page. The drop has largely tracked bitcoin’s own reversal from its record high above $126,000 to roughly $93,000. William Blair analysts, however, project that XYZ could climb back above $90 over the next year.
Block (XYZ) Price Chart. Source: The Block/TradingView
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