Investors in Block (XYZ -7.48%) have been on a wild ride. This was once a top-performing stock, with shares soaring 2,430% in the five-year period leading up to the all-time record. After the market tanked in 2022, this stock has had a difficult time recovering.
If you'd invested $500 in Block shares five years ago, here's how much you'd have today.
Image source: Block.
Block stock's return is disappointing
Block shares are down 56% in five years (as of Oct. 9), turning $500 into a disappointing $220 today. The company performed exceptionally well during the COVID-19 pandemic, with gross profit up 45% in 2020 and 62% in 2021, as digital payments adoption was robust.
It's easy to be optimistic about the business
Compared to five years ago, the business is much bigger today. The Square segment, which generated over $1 billion in second-quarter (ended June 30) gross profit, counts more than 4 million merchants using its platform. Cash App has 57 million monthly active users, and it reported $1.5 billion of gross profit in the second quarter.
Even better, Block is expected to generate $2 billion in non-GAAP operating income in 2025. In 2020, the company posted an operating loss of $19 million.
Despite the improved fundamental position, investors might not be pleased that growth is slower than in years past. Competition also remains fierce.
