Block Inc. experienced its largest share decline in nearly five years, plummeting almost 18% to $68.35 after the digital payments company reported fourth-quarter profit and revenue that fell short of analysts’ expectations. This marks the steepest closing drop since March 2020, despite the stock having risen approximately 26% over the past year. The company’s revenue from its Cash App service reached $6.03 billion, falling short of the $6.28 billion average forecast from analysts. Net income soared to $1.95 billion, or $3.05 per share, compared to $102 million, or 16 cents, in the same quarter last year. However, adjusted earnings were reported at 71 cents, below the anticipated 89 cents.
Analyst Dan Dolev from Mizuho Securities noted that while there were some positive aspects in the quarter, the unchanged gross profit guidance—projecting at least a 15% increase in 2025—and the relatively stagnant growth in Cash App’s monthly active users were concerning. Dolev stated, “The issue is it was just okay. In this market, people want more than okay. They want to see the old days where things were like, wow.”
As of December, 2.5 million of Cash App’s 57 million active users opted for direct deposit of their paychecks into the app, reflecting a 25% year-over-year increase. This rise in direct deposit users followed heightened marketing efforts in the latter half of 2024 as Block pursued its “bank our base” strategy. The number of active Cash App card users grew to 25 million in the latest quarter, up from 24 million in the previous quarter. Block’s buy now, pay later service, Afterpay, is set to become more widely available through the Cash App card in the coming weeks. Over the past year, Block originated $150 million in loans while testing this integration, according to Chief Financial Officer Amrita Ahuja.
Cash App’s Bitcoin revenue for the quarter was $2.4 billion, which was below the analyst estimate of $2.63 billion. In January, Block reached a settlement with the US Consumer Financial Protection Bureau (CFPB) and most of its state money transmitter license regulators, agreeing to pay at least $75 million in consumer redress and $55 million in civil penalties due to inadequate customer service and failure to address fraud effectively on the platform. The company is still in negotiations with the New York Department of Financial Services. Block, also known for its Square payment terminals, competes with PayPal and Stripe.
