To The Moon

$Block, Inc.(XYZ)$ is scheduled to report its Q4 2025 earnings on Thursday, February 26, 2026, after the market closes.

This is a pivotal moment for the company. After missing EPS estimates in Q3 2025, management raised full-year guidance, putting significant pressure on this Q4 report to prove they can deliver on "Rule of 40" profitability targets.

Analyst Expectations vs. Sentiment

The Sentiment Gap: While management is bullish, analysts have been cautious. The consensus EPS was recently revised downward, and the stock carries a "Neutral" technical rating. This creates a "low bar" scenario—if Block simply meets its own raised guidance, it could trigger a relief rally.

Block’s fiscal Q3 2025 earnings (reported in November 2025) were a classic case of "good execution, bad optics." While the company achieved its internal goals and raised forward guidance, the stock plummeted nearly 12% in the immediate aftermath due to a "headline miss" on revenue and earnings.

Q3 2025 Financial Summary

The "Good": Cash App is the Growth Engine

The real strength of the quarter came from Cash App, which grew its gross profit by 24% YoY.

• High-Value Users: Gross profit per monthly active user hit $94, a 25% increase, proving that users aren't just sending money—they are using higher-margin products like Cash App Borrow and the Cash App Card.

• Banking Transition: Primary banking actives reached 8.3 million, showing that Block is successfully migrating from a "utility app" to a "bank replacement."

The "Bad": The Square Margin Squish

The primary reason for the stock's decline was a perceived weakness in Square.

• The Yield Spread: Square’s volume (GPV) grew by 12%, but its gross profit only grew by 9%. This "spread" worried investors.

• The Culprit: Management explained that this was due to a change in processing partners to increase "operational flexibility," which added a 2.6 percentage point headwind to margins—a headwind that won't be fully lapped until mid-2026.

The Lesson Learned from Guidance

Despite the stock drop, management raised its full-year 2025 gross profit guidance to $10.24 billion. This move offered a critical lesson for investors:

1. Don't Trade on the Headline Revenue:

In the fintech world, revenue is often "noisy." For Block, Bitcoin revenue fluctuates wildly but has very thin margins. The lesson is that Gross Profit is the only reliable signal of Block's health. The stock fell because of the revenue "miss," but the company's core profitability actually improved.

2. The Market Hates "Transition Years":

Block spent much of 2025 overhauling its sales force (growing from zero to over 100 field reps) and changing backend partners. These moves are technically sound but create "lumpy" margins. The lesson for Q4 and beyond is that the market will punish any lack of clarity during these transitions, even if the long-term outlook is positive.

3. The "Rule of 40" is the New Filter:

Management’s aggressive stance on guidance shows they are prioritizing the Rule of 40 (Gross Profit Growth % + Operating Margin %). By raising guidance despite a "miss," they signaled that they are willing to cut costs (evidenced by the 10% staff reduction) to hit profitability targets, even if top-line growth isn't perfectly linear.

Key Metrics to Watch

Investors will likely ignore the top-line revenue (which is often skewed by Bitcoin volatility) and focus on these three core areas:

• Gross Profit Growth (Guidance: 19%+): This is Block's "North Star." Management previously guided for $2.755 billion in gross profit for Q4. Any miss here would likely trigger a sharp sell-off, as the bull case relies on accelerating growth (up from 18% in Q3 and 14% in Q2).

• Adjusted Operating Income (AOI): Block is trying to shed its "growth at all costs" reputation. Watch for an AOI of roughly $560 million (20% margin). Investors want to see that the 10% workforce reduction announced in early February is already translating into better margins.

• Cash App Monetization: Specifically, Gross Profit per Monthly Transacting Active (MTA). In Q3, this hit $94 (up 25% YoY). If this continues to climb, it proves that Cash App is successfully evolving from a simple P2P app into a primary banking engine.

Block (XYZ) Price Target

Based on 39 analysts from Tiger Brokers app offering 12 month price targets for Block in the last 3 months. The average price target is $82.54 with a high forecast of $105.00 and a low forecast of $45.00. The average price target represents a 61.85% change from the last price of $51.00.

Short-Term Trading Opportunities

Earnings season for Block is historically volatile, often seeing double-digit percentage swings in after-hours trading.

1. The "Rule of 40" Play (Bullish Case) If Block meets its 19% gross profit growth and provides 2026 guidance that puts them firmly on track for the Rule of 40 (Gross Profit Growth + AOI Margin), the stock could break out of its recent slump. Recent price targets from UBS ($90) suggest significant upside if the "banking" narrative holds.

2. The Bitcoin "Noise" Fade (Bearish Risk) Bitcoin revenue is expected to decline (~$2.16B vs. $2.43B last year). While savvy investors look past this, the "headline miss" on total revenue due to lower BTC volume often causes an initial algorithmic dip. A quick trader might look to buy that initial dip if the underlying Square/Cash App gross profit numbers are actually strong.

3. The Workforce Reduction Reaction Watch the conference call for details on the 10% staff cut. If Jack Dorsey emphasizes that these cuts are finished and the focus is now on AI-driven efficiency (like the "Goose" AI tool), the market may reward the stock for its newfound fiscal discipline.

Summary Table: The "Beat" vs. "Miss" Scenarios

Technical Analysis - Exponential Moving Average (EMA)

Block have suffered a sharp decline with a negative RSI momentum, though we are seeing the Block bulls trying to make an upside move, but it did not manage to make any significant upside. If we looked at how the previous earnings have also seen the share price dropped after its earnings, we might be expecting a decline.

But if Block could exceed the “low bar” sentiment, we might see a nice relief rally to see Block making a new highs.

Summary

Block (XYZ) reports Q4 2025 earnings on Thursday, February 26, 2026, after the market closes. Following a volatile 2025 marked by workforce reductions and a transition to the "Rule of 40" profitability framework, this report is a critical "prove it" moment for management.

Core Analysis

The market enters this report with a "low bar" sentiment. Analysts have recently revised EPS estimates downward, and the stock has traded significantly below its 52-week highs. While top-line revenue is expected to grow only ~6% (hampered by a forecasted 11% drop in Bitcoin revenue), the real story is Gross Profit. Management previously guided for $2.755 billion (19% growth). Meeting or exceeding this number is essential to prove that Cash App’s monetization—which hit a record $94 per user last quarter—is sustaining its momentum.

Key Metrics to Watch

• Gross Profit Growth (Target: 19%+): The primary indicator of health for the Square and Cash App ecosystems.

• Adjusted Operating Income (Target: ~$560M): This will show if the 10% staff cuts and AI-driven efficiencies (e.g., "Goose" AI) are successfully expanding margins.

• Banking Actives: Investors want to see growth in users who treat Cash App as their primary bank, as these users generate significantly higher lifetime value.

Opportunity & Strategy

• The "Beat & Raise" Play: If Block beats on Gross Profit and issues strong 2026 guidance, the stock could see a double-digit "relief rally" due to its currently compressed valuation (P/E ~10.2).

• The Dip-Buy Scenario: Often, a "miss" on headline revenue caused by Bitcoin volatility triggers an initial algorithmic sell-off. Savvy traders may look to buy this dip if the underlying Cash App/Square gross profit remains robust.

• The Pivot Lesson: Q3 taught us that the market will punish "noisy" transitions (like backend partner changes). In Q4, clarity on the Square Field Sales ROI and the completion of operational overhauls will be the deciding factor for sustainable gains.

Appreciate if you could share your thoughts in the comment section whether you think Block could stage a relief rally with a strong gross profit with its compressed valuation.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.