After Friday’s closing bell, S&P Global announced that Block Inc. (XYZ) will be added to the benchmark S&P 500 Index ($SPX) effective before the start of trading this Wednesday, July 23. Jack Dorsey-led Block joins the index following Chevron's (CVX) acquisition of Hess Corp., which was formally closed late last week.
XYZ stock has spiked 9.8% in premarket trading this Monday morning, with investors eagerly anticipating a fresh wave of share purchases from fund managers and institutional investors as Block joins the S&P - and, by extension, its coterie of tracking ETFs.
The stock’s early momentum extends a recent breakout by XYZ above its 200-day moving average, and puts the fintech stock on pace for a test of the round $80 level - which is also the next major call strike for Block, looking out through August monthly expiration.
How is Block Stock Performing in 2025?
Prior to today’s rally, XYZ has logged a substantial 25% decline in stock value year-to-date, despite positive momentum in the broader market. This decline can be attributed primarily to decelerating gross profit growth in both its Square merchant segment and Cash App consumer division, compounded by reduced consumer discretionary spending.
More broadly, Block’s historical performance during market downturns has been notably weak, as demonstrated by its significant decline during the 2022 inflation shock and incomplete recovery since then. With a market capitalization of $44.7 billion and trading at approximately 3.5 times gross profit, Wall Street analysts maintain an optimistic “Moderate Buy” consensus, despite recent market challenges.
Inside Block’s Fundamental Performance
Block maintains a strong financial position with impressive metrics, including $13 billion in cash and a favorable debt-to-equity ratio of 14.2%. The company maintains strong liquidity, with current assets more than twice its short-term obligations, providing a solid foundation for future growth. XYZ’s current valuation appears reasonable, trading at 1.8x trailing 12-month revenues, which is notably below its five-year average of 2.8x and the S&P 500's multiple of over 3x.
That said, Block's operational performance has delivered mixed results, combining moderate revenue growth of 13.3% over the past three years with concerning profit margins, as evidenced by an operating margin of just 7.4%. However, revenue growth of 4.6% over the last 12 months suggest resilience in its core business model, despite current market headwinds.
What’s Driving Growth at XYZ?
Looking ahead, the fintech company has demonstrated strategic initiative through several key developments - including the launch of Square AI, an artificial intelligence (AI) tool for U.S.-based sellers - and expanded partnerships with Live Nation Canada. Additionally, Block has introduced its Square Handheld point-of-sale device to the UK market, enhancing its global presence and market reach.
Along with the Aug. 7 earnings report, Block's upcoming Investor Day event on Nov. 19 will be crucial in showcasing its long-term strategy and financial framework to stakeholders.
Looking forward, potential interest rate reductions by the Federal Reserve could provide a catalyst for improvement in Block's business fundamentals and stock performance. While the company’s addition to the S&P should draw institutional buyers to XYZ stock, retail traders should give careful consideration to the company's growth challenges.
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On the date of publication, Elizabeth H. Volk did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
