Have you ever held onto a grudge against a company or its leader because of one bad experience, only to watch the market prove you wrong? That’s exactly where Josh Brown found himself with Block, the fintech powerhouse formerly known as Square. After getting burned on Twitter, another Jack Dorsey venture, Brown approached this name with serious caution. Yet here we are, with Block earning its spot on his prestigious Best Stocks in the Market list.
I have to admit, watching seasoned investors like Brown reconsider their positions is one of the most fascinating parts of following the markets. It shows that even the pros aren’t afraid to evolve their thinking when the data starts telling a different story. And right now, the numbers for Block are starting to paint a compelling picture of recovery.
From Meme Stock Darling to Turnaround Candidate
Let’s rewind a bit. Square was one of those pandemic-era rockets that captured everyone’s imagination. The company provided essential tools for small businesses shifting to contactless payments, and its Cash App became a go-to for peer-to-peer money transfers. During that boom, the stock soared, becoming a favorite among growth investors chasing the next big thing in fintech.
But success often brings complexity. The company rebranded to Block, made some headline-grabbing moves like acquiring Tidal, loaded up on Bitcoin, and bought Afterpay at what many considered the peak of the market. These decisions, combined with increased competition in payments, led to a painful decline. The stock dropped dramatically over several years, leaving many wondering if the glory days were truly over.
Yet as someone who has followed these names for years, I’ve learned that the best opportunities often emerge during these periods of doubt. When sentiment hits rock bottom but the core business starts showing signs of life, that’s when patient investors can find real value.
The Refocus That Matters
What stands out most in Block’s recent journey is the deliberate shift back to basics. The company has streamlined operations, reducing headcount significantly while concentrating resources on its two strongest pillars: Square’s payment solutions for businesses and the ever-popular Cash App.
This isn’t just corporate speak. Recent quarterly results showed Cash App gross profit jumping 38% year over year, reaching nearly $1.91 billion. Monthly active users climbed to 59 million, marking the fastest growth pace in about a year and a half. Even more impressive, their borrowing product saw originations surge by 175%.
The focus on core businesses is finally paying dividends, both literally and figuratively for shareholders who stick around.
On the hardware and merchant side, gross payment volume grew 13% to $61.2 billion. Particularly strong was the food and beverage sector, up 21%, which signals that small businesses using Square are seeing genuine recovery and expansion in key areas.
Management has also embraced artificial intelligence internally, reporting that production code shipped per engineer increased 2.5 times in a short period, while automating a large portion of customer support inquiries. These efficiency gains matter enormously in a competitive industry where margins can make or break long-term success.
Guidance That Commands Attention
Perhaps most telling was the raised full-year outlook following strong first-quarter performance. Block now expects gross profit around $12.33 billion, representing 19% growth, with adjusted operating income hitting $3.34 billion at a healthy 27% margin. Adjusted earnings per share are projected at $3.85, which would mean roughly 62% growth from the previous year.
When a company not only meets but exceeds expectations and then raises the bar for the full year, it deserves closer examination. Especially one trading at what appears to be a reasonable multiple given this trajectory.
- Cash App ecosystem showing robust user and revenue growth
- Merchant services demonstrating resilience in key verticals
- Operational efficiency improving through technology investments
- Clear strategic focus after shedding non-core distractions
Of course, past performance doesn’t guarantee future results, and the payments space remains intensely competitive. But the early signs suggest this could be the beginning of a more sustainable growth phase.
Valuation Tells Its Own Story
Here’s where things get particularly interesting for value-conscious investors. Block currently trades at approximately 15 times forward earnings for a business guiding toward 62% EPS growth. That disconnect between growth potential and current pricing creates an intriguing setup.
The market, it seems, remains skeptical. Memories of previous missteps and the broader challenges in fintech have kept enthusiasm in check. But as we’ve seen time and again, when fundamentals improve faster than sentiment, the eventual re-rating can be quite powerful.
In my experience following these situations, the stocks that perform best are often those where the narrative has shifted from “story stock” to “show me the numbers” – and Block appears to be delivering those numbers.
Technical Picture Offers Clear Guardrails
Beyond the fundamentals, the chart action provides important context for traders and investors alike. After a brutal multi-year downtrend, Block has been building a base in the $50s and $60s range before recently pushing toward the upper boundary.
The pattern of higher lows remains intact, and recent pullbacks have found support well above key moving averages. This technical structure suggests that while momentum isn’t explosive yet, the foundation for potential upside is forming.
Key levels to watch include the recent swing high around $81. A convincing close above that could signal broader participation. On the downside, the 50-day moving average near $74 and the 200-day around $68 serve as important reference points for risk management.
Waiting for confirmation rather than jumping in at resistance has saved many portfolios from unnecessary pain.
This measured approach aligns well with Brown’s own comments about not fully trusting the name yet but acknowledging the improving setup. It’s a refreshing dose of realism in an industry often prone to hype.
The Jack Dorsey Factor
No discussion about Block would be complete without addressing its founder. Jack Dorsey’s unconventional style has produced both brilliant innovations and eyebrow-raising decisions. From the Tidal acquisition that ultimately didn’t pan out as hoped to other ventures that captured headlines more than profits.
Yet the current refocus suggests lessons learned. Stepping back from distractions and doubling down on what works demonstrates a level of maturity that markets eventually reward. Dorsey’s commitment to Bitcoin also adds an interesting layer, though its impact remains more strategic than immediate for most investors.
Whether you admire the visionary approach or prefer more conventional leadership, the proof ultimately lies in the financial results. And those results are beginning to validate the renewed strategy.
Risks That Smart Investors Must Consider
Let’s be clear – this isn’t a risk-free opportunity. The competitive landscape in digital payments includes well-funded players with massive user bases. Economic slowdowns could pressure small business spending, directly impacting Square’s volumes. Regulatory changes in fintech also represent an ever-present consideration.
- Intense competition in peer-to-peer payments
- Potential economic sensitivity of small merchants
- Execution risks in maintaining growth momentum
- Broader market sentiment toward high-growth tech names
These factors explain why the valuation remains discounted compared to peak enthusiasm periods. The market is pricing in skepticism, which actually creates the margin of safety that disciplined investors seek.
Position sizing becomes crucial here. Even those intrigued by the story would be wise to start with smaller allocations and add on strength rather than betting the farm on a single name, no matter how compelling the turnaround narrative appears.
What Would Success Look Like?
For Block to truly reward shareholders from current levels, several things need to happen. Sustained user growth in Cash App, continued expansion of payment volumes, and perhaps most importantly, consistent delivery on profitability targets.
If the company can maintain or exceed its raised guidance while steadily improving margins, the multiple expansion could be significant. Stocks that grow earnings at 50%+ rates while trading at teens multiples don’t stay that way forever if the growth proves durable.
There’s also the broader industry context. Reports of major players exploring combinations in payments suggest the sector is maturing and consolidating. Being a nimble player with strong organic growth could position Block favorably in this environment.
Lessons for Individual Investors
This situation offers several takeaways worth internalizing. First, separating the founder from the business fundamentals is essential. Charismatic leaders can both create and destroy value, but numbers ultimately tell the real story.
Second, technical analysis provides valuable guardrails even for long-term investors. Understanding key support and resistance levels helps manage risk and avoid buying at the worst possible times.
Third, having the intellectual honesty to reconsider previous biases separates good investors from the rest. Brown’s willingness to put Block on his list despite personal history with Dorsey ventures demonstrates this quality perfectly.
The market doesn’t care about your past trades. It only rewards those willing to adapt to new information.
I’ve found that reviewing watchlists regularly and forcing myself to articulate why I own or avoid certain names leads to better decision-making over time. Block represents exactly this kind of test case.
The Bigger Picture in Fintech
Beyond the specific Block story, this reflects broader trends in financial technology. The shift toward digital payments accelerated dramatically during recent years and shows no signs of reversing. Small businesses continue adopting modern tools, while consumers increasingly prefer seamless mobile solutions for money movement.
Companies that combine strong network effects with improving unit economics stand the best chance of thriving. Block appears focused on exactly that combination now, after years of experimentation.
The Bitcoin holdings add another dimension. While volatile, a strategic commitment to the asset could prove prescient if institutional adoption continues. It differentiates Block from pure payments plays and aligns with Dorsey’s long-held beliefs.
Monitoring Progress Going Forward
For those considering an investment or already holding shares, the upcoming quarters will be critical. Key metrics to track include Cash App user growth, monetization trends, merchant acquiring volumes, and margin progression.
Management commentary around strategic priorities and capital allocation will also provide important signals. Consistency in messaging and execution tends to build investor confidence over time.
| Key Metric | Recent Performance | Implication |
| Cash App Gross Profit | +38% YoY | Strong user monetization |
| Payment Volume | +13% to $61.2B | Merchant recovery |
| EPS Guidance | +62% expected | Improving profitability |
These aren’t just numbers on a spreadsheet. They represent real progress in building sustainable competitive advantages in a rapidly evolving industry.
As we move through the remainder of the year, Block’s ability to deliver on its promises while navigating any macroeconomic challenges will determine whether this turnaround becomes a multi-year success story or another false dawn.
Final Thoughts on Opportunity and Patience
Investing in turnaround situations requires both conviction and patience. The market’s initial skepticism provides the setup, but only consistent execution converts potential into performance.
Block currently sits at an interesting crossroads. The business improvements are visible, the valuation offers a cushion, and the technical base appears supportive. Yet the founder’s history and past strategic detours keep enthusiasm measured.
This balance between improving reality and lingering doubt often creates the most rewarding asymmetric opportunities. Not every story works out, of course, which is why risk management remains paramount.
Whether Block ultimately rewards those who add it to their portfolios will depend on execution in the quarters ahead. But the fact that experienced voices like Josh Brown have given it fresh consideration suggests the name deserves attention from growth-oriented investors.
In the end, markets reward adaptability – both for companies reinventing their focus and for investors willing to update their theses with fresh evidence. Block appears to be doing the former, and smart money is starting to take notice of the latter.
The coming months should provide more clarity on whether this fintech name can truly break out of its multi-year funk and reward patient capital. For now, the setup merits watching closely.
Remember that all investing involves risk, and past performance doesn’t guarantee future results. Always conduct your own due diligence or consult with qualified financial professionals before making investment decisions. The information here is for educational and discussion purposes only.
