In the five-year period leading up to its all-time high in August 2021, shares of Block (XYZ 3.08%) were up an astonishing 2,430%. They were certainly a favorite among the investment community.
However, it's been a much more pessimistic story since then. As of this writing, the fintech stock trades 80% below its record. This is despite it being a much larger business today.
At the price-to-sales ratio of 1.5, which is significantly cheaper than its historical average, Block might have the attention of investors looking at things to turn around. Can shares double by 2030? Perhaps the company's secret weapon will provide a boost.
NYSE: XYZ
Key Data Points
Dorsey's focus
In July 2021, Jack Dorsey, co-founder and CEO, publicly stated his belief in Bitcoin (BTC 1.57%) eventually becoming the native currency of the internet. His company first purchased the world's top cryptocurrency for its own balance sheet in October 2020.
Dorsey's view led to a shift in Block's strategic priorities. Via its Cash App segment, the business had already been facilitating the buying and selling of Bitcoin for consumers since as early as 2018. But recently, the company is pushing more aggressively into the space.
Block's first-quarter 2024 shareholder letter provided some key details about the business wanting to make Bitcoin accessible, more secure, and usable every day. It was also stated then that Block would allocate 10% of its monthly gross profit to buy Bitcoin.
Today, Block has a Bitkey Bitcoin hardware wallet available for sale for $150. It's also working on Proto, an open Bitcoin mining system that sells chips.
In 2024, Bitcoin generated just 3% of the company's entire gross profit, so it remains a tiny contributor. But as of this writing, it held $740 million worth of Bitcoin, making it one of the largest corporate owners out there.
It's early innings now, but Bitcoin-related activities are poised to represent a larger chunk of Block's financial performance over time. Moreover, the company's Bitcoin holdings could be worth a lot more in the future if the digital asset's performance going forward is even remotely as positive as it was historically.
In the last five years, it has surged 1,300%. That kind of trajectory could support increased interest from Block's customers to adopt the crypto, leading to more revenue-generating potential. Additionally, it could push the market to view Dorsey's vision more favorably, leading to a higher valuation multiple for the stock.
Bitcoin's decentralized setup is what its ideologic supporters say might be its best characteristic. Anyone in the world with an internet connection can access the network. This perspective aligns with Block's overarching mission of "increasing access to the economy" and to "build a financial system that is open to everyone."
CRYPTO: BTC
Key Data Points
Two thriving segments
With all the attention on Bitcoin, it's easy to forget that Block has two successful segments that are registering fantastic growth. Square, which focuses on merchants with a suite of software, hardware, and financial services, increased gross profit 12% in Q4. Cash App targets individual customers with different personal finance tools. Its gross profit jumped 16%.
Management's emphasis on controlling costs has boosted the bottom line. Block's operating income totaled $892 million in 2024. That was a drastic improvement from $279 million loss in 2023. And in 2025, the projection is for adjusted operating income to be $2.1 billion. With a total addressable market of $205 billion (gross profit for both segments), there is potential for long-term expansion.
As mentioned, shares trade at a historically cheap valuation. Given that the company continues to register profitable growth, it's hard not to be interested. There is a good setup to see a double between now and 2030.
But for those who decide to buy the stock, it's probably table stakes to also be bullish on Bitcoin. For those who are more critical, though, I can understand why leaning so heavily on a cryptocurrency adds an element of uncertainty as to what the business will look like five or 10 years down the road.
