Payments company Block, led by Jack Dorsey, is poised for significant growth driven by its expanding short-term lending services and the resurgence of its Square business, according to a recent analysis by William Blair.
Analysts Andrew W. Jeffrey and Adib Choudhury of William Blair highlight Block’s increasing relevance in the high-turnover credit segment as a key pillar for its long-term trajectory. They point to accelerating gross profit growth, expanding margins, and the rising adoption of Cash App’s lending features.
Cash App Borrow, a prominent credit product within Block’s ecosystem, reported a 134% increase year-over-year. Analysts expect this product to continue driving growth, particularly among users seeking small, short-duration, and immediate loans, a segment often underserved by traditional banks.
The product’s four-week repayment model and robust data analysis systems keep losses below 3% while generating solid returns.
Square, Block’s commercial payments and point-of-sale unit, is also regaining momentum. The firm notes that Square is actively adding more distribution partners and updating its credit models for small businesses. This strategy aims to bridge the gap between processed transaction volume and generated profit, an area of concern for some investors.
William Blair projects that Block’s stock, trading under the ticker XYZ, could recover to levels above $90 per share within the next year, representing an upside of more than 40%.
These positive projections come after Block reported third-quarter revenues of $6.11 billion. Approximately $2 billion of this total came from its Bitcoin services, accounting for roughly one-third of overall revenue.
Gross profit for the quarter increased by 18% year-over-year. However, adjusted operating income and EBITDA fell below market expectations, causing Block’s shares to drop nearly 10% in after-hours trading.
Block holds 8,780 Bitcoin on its balance sheet and recorded a negative impairment loss of $59 million related to these holdings. The stock has experienced a three-week decline, currently trading slightly above $58, a drop of over 27% from last month’s price below $80. The stock’s decline mirrored a broader downturn in the cryptocurrency market.
In addition to its lending functions, Cash App has recently expanded its cryptocurrency capabilities. The platform now supports Bitcoin and stablecoin payments, including transactions via the Lightning Network, which can be made even without users holding a Bitcoin balance. Merchants associated with Square can opt to accept or settle payments in either U.S. dollars or Bitcoin, further integrating the consumer application with Block’s merchant network.