{"id":14515,"date":"2025-05-03T04:58:55","date_gmt":"2025-05-03T04:58:55","guid":{"rendered":"https:\/\/finderica.com\/?p=14515"},"modified":"2025-05-03T04:58:55","modified_gmt":"2025-05-03T04:58:55","slug":"can-jack-dorsey-rescue-blocks-plunging-stock","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=14515","title":{"rendered":"Can Jack Dorsey Rescue Block\u2019s Plunging Stock?"},"content":{"rendered":"\n
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Block CEO Jack Dorsey is pulling a bunch of different levers to try to bring back faster growth.<\/p>\n

AFP via Getty Images<\/small><\/figcaption><\/figure>\n

Y<\/abbr>esterday was a rough one for Jack Dorsey, the billionaire CEO of Block, which makes credit card readers and point-of-sale software for small businesses and owns popular banking app Cash App. During Block\u2019s first quarter earnings call for 2025, the company announced that gross profit grew just 9%, compared with the 11% it had predicted, falling about $30 million short of expectations. Block also shrunk its previous full-year 2025 forecast for gross-profit growth from 15% to 12%.<\/p>\n

The results are a stark contrast to Block\u2019s expansion over the prior two years, when gross profit rose 25% in 2023 and 18% in 2024. The worsening trend has alarmed investors and pulled the stock down 20% today, slashing Dorsey\u2019s net worth by about $600 million.<\/p>\n

On the May 1 earnings call, Block chief financial officer Amrita Ahuja said the company in February and March saw less money coming into consumers\u2019 Cash App accounts than expected. Consumer spending softened, especially in users\u2019 travel and entertainment purchases. She said Block is trying to be cautious in its revised full-year growth forecast due to the drop it saw in consumer spending.<\/p>\n

Over the past five years, Jack Dorsey\u2019s company has seen its stock rise and fall more dramatically than that of any other major fintech company aside from PayPal. The 16-year-old San Francisco business hit a peak market value of more than $110 billion in 2023. It saw most of that value evaporate in 2023 amid the downturn of the fintech market. Today, Block has a market capitalization of $28 billion, making Dorsey\u2019s entire enterprise worth $1 billion less than what Block paid just to acquire buy-now, pay-later business Afterpay in 2023. Now Dorsey is pulling a bunch of levers to try to turn the company around, including improving internal efficiency and innovation in its Square point-of-sale business, hiring a traditional sales force for Square, squeezing more revenue out of its Cash App users and selling bitcoin mining devices.<\/p>\n

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Have a story tip? Contact Jeff Kauflin at jkauflin@forbes.com or on Signal at jeff.273.<\/em><\/p>\n

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B<\/abbr>lock\u2019s massive stock drop has been caused by slowing growth in both its Cash App and Square businesses. Cash App lets consumers do everything from making purchases and peer-to-peer payments to borrowing money, and it has a large base of 57 million monthly active users. But that number hasn\u2019t budged upward over the past 16 months.<\/p>\n

Block\u2019s small business Square products have seen a major deceleration too. \u201cSquare went from being this massive market-share gainer to a share maintainer or even a share donor, depending on the quarter you’re looking at,\u201d says Ken Suchoski, an equity research analyst at Autonomous. Companies like Toast and Fiserv-owned Clover have expanded much faster, with Toast gobbling up 50% to 60% of new restaurants that sign up for a point-of-sale system, according to Suchoski. Adam Frisch, a former payments company CEO who now leads fintech research at investment bank Evercore ISI, says, \u201cToast is the best product out there, but they’re the most expensive too.\u201d<\/p>\n

Frisch thinks the slump for Square\u2019s merchant business is due to \u201cself-inflicted wounds\u201d related to \u201clack of organizational focus and limited product development.\u201d He adds, \u201cI’m shocked that Block has been able to get to the point where it is without having that kind of organizational rigor.\u201d But he thinks the company has improved significantly over the past year.<\/p>\n

In Block\u2019s fourth quarter earnings call in February 2025, Dorsey addressed the topic. He said that, for the first time since he founded the company, Square had created \u201ca prioritized roadmap across our entire company and all of our product, services and surface areas \u2026 We have a directly responsible individual on task for each one. That gives us a lot more accountability.\u201d Frisch believes this development \u201cwent largely overlooked by Wall Street, but it’s important from an operational perspective.\u201d Last week, Block announced<\/a> that it consolidated its different Square apps into a single app to improve the user experience for merchants and offer them more software-based services.<\/p>\n

Dorsey has also been revamping Square\u2019s sales strategy. Historically, Square focused on micro-businesses like coffee shops and made its product easy to self-serve digitally without hiring a large sales force. Over the past two years it has been moving upmarket, landing more mid-market merchants that earn $500,000-plus in annual revenue. In late 2024, Square launched a \u201cfield sales\u201d initiative to put more local reps on the ground and will continue hiring more salespeople, Block CFO Amrita Ahuja said on the company\u2019s first quarter earnings call yesterday.<\/p>\n

Having a larger, more proactive sales force has worked well for Toast and payments company Shift4, says Jevgenijs Kazanins, a product manager at Estonia-based LHV Bank who analyzes public fintech companies and writes about them for his Popular Fintech newsletter. \u201cToast and Four are heavily sales-driven companies,\u201d Kazanins says. Ahuja said yesterday that Square\u2019s processing volume grew 9.6% in April, a seemingly faster pace than expected, and that Square\u2019s products are now gaining market share.<\/p>\n

For Cash App, Block is leaning into a couple of areas to rejuvenate growth, analysts say. It\u2019s trying to get more Cash App customers to sign up for direct deposit of their paychecks, since that leads people to engage more with the app, using it to make purchases and borrow money, earning more revenue for Block.<\/p>\n

But Dorsey has been trying to do this for years\u2013since before Covid began, Suchoski notes\u2013and hasn\u2019t gained strong traction. As of December 2024, 2.5 million of Cash App\u2019s 57 million active users had set up direct deposit, an increase of 25% from the year prior. In the fight for more direct-deposit customers, Cash App faces formidable competition from the largest U.S. banks and digital bank Chime, which has been aggressively encouraging its own customers to sign up for direct deposit since it was founded 13 years ago. As of May 2024, most of Chime\u2019s seven million monthly active customers had signed up for direct deposit, according to the company.<\/p>\n

A more promising area of growth for Cash App has been Borrow, its short-term, small-dollar loans for which it charges a 5% fee. In its first quarter earnings report for 2025, Block said it\u2019s rolling out this feature to \u201cmillions more\u201d Cash App users, almost doubling the number of people eligible for the loans by expanding to more U.S. states. This expansion comes after Block recently received approval from the FDIC to use the banking charter it secured years ago for Square to issue consumer loans through Cash App Borrow.<\/p>\n

Suchoski estimates that Block\u2019s lending businesses, including Cash App Borrow, Afterpay and Square Loans (where it lends to its Square\u2019s merchant customers), are driving 30% to 40% of Block\u2019s annual gross-profit growth. Afterpay has been growing roughly 20% to 25% per quarter over the last two years, similar to the expansion rate of other large buy-now, pay-later providers, Suchoski says.<\/p>\n

Some investors worry that, in a shaky U.S. economy where fears of a recession have risen, lending businesses become riskier\u2013especially those serving lower-income customers, like Block. Ahuja said yesterday that Block is upping lending limits to people who get their paycheck direct-deposited into Cash App. She says they\u2019re seeing \u201cconsistent repayment rates\u201d so far, and since the average loan is less than 30 days, they can adjust quickly if defaults start to rise.<\/p>\n

Dorsey mentioned a few other areas Block is expanding into on the earnings call. He wants to target teens and families as new Cash App users, especially after the company has finally integrated Afterpay into Cash App. He said Block has built a new internal AI tool called Goose that helps software engineers be more productive, adding that the tech is improving the whole company\u2019s productivity and will eventually be used for customer-facing features in Cash App and Square.<\/p>\n

The Block CEO has long been a fan of bitcoin, and he said the company is on track to start selling chips and systems for minting bitcoin later this year. \u201cWe believe the bitcoin hardware supply industry is a $3 billion to $6 billion annual revenue industry,\u201d he said yesterday, adding that Block\u2019s new \u201cProto\u201d products \u201cwill allow even consumers and tinkerers to play with mining.\u201d While Cash App has offered bitcoin buying and selling for years, crypto-based products account for just 3% of Block\u2019s gross profit today, Suchoski estimates.<\/p>\n<\/div>\n

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Block CEO Jack Dorsey is pulling a bunch of different levers to try to bring back faster growth. AFP via Getty Images Yesterday was a rough one for Jack Dorsey, the billionaire CEO of Block, which makes credit card readers and point-of-sale software for small businesses and owns popular banking app Cash App. During Block\u2019s<\/p>\n","protected":false},"author":1,"featured_media":14516,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[810,5978,1816,5387,5979,222],"class_list":{"0":"post-14515","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-blocks","9":"tag-dorsey","10":"tag-jack","11":"tag-plunging","12":"tag-rescue","13":"tag-stock"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14515"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14515\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/14516"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}