Shares of Block experienced a significant rally of approximately 17% during Friday’s pre-market session following CEO Jack Dorsey’s announcement of a sweeping 40% workforce reduction.
Block, Inc., XYZ
The restructuring will reduce total headcount to roughly 6,000 workers, with the company planning to utilize artificial intelligence to handle the displaced responsibilities.
Morgan Stanley’s James Faucette swiftly elevated XYZ from Hold to Buy, establishing a fresh price objective of $93, representing an increase from the previous $72 target.
He adjusted his 2026 EPS projection upward to $3.81 from $3.19, while his 2027 forecast increased to $5.19 from $4.10.
Morgan Stanley‘s $93 price objective reflects 18 times the 2027 adjusted EPS. The investment bank acknowledged this valuation might prove conservative considering anticipated revenue growth and approximately 26% EPS expansion expected in 2027.
In a shareholder letter, Dorsey disclosed that more than 4,000 workers are being asked to depart or begin consultation processes. CFO Amrita Ahuja characterized the reductions as strategically positioning Block for its “next chapter of sustainable growth.”
Leadership emphasized that margin enhancement stems from operational improvements rather than reactive cost-cutting measures. This narrative distinction resonated positively with market participants.
Cash App gross profit expanded 33% during Q4 2025, while monthly active users increased to 59 million from the prior year’s 57 million.
Cash App incorporated 1 million primary banking actives during Q4 exclusively, elevating that metric to 9.3 million.
Consumer lending originations expanded 69% year-over-year in Q4, while Cash App Borrow originations surged an impressive 223%.
Regarding the Seller segment, pricing modifications have attracted larger merchants and enhanced adoption of supplementary services. Seller gross payment volume has demonstrated acceleration since Q2 2025.
Total gross profit increased 24% in Q4 2025 — representing a meaningful rebound from the deceleration observed between 2022 and 2024, when expansion had contracted to 18%.
Bank of America’s Jason Kupferberg elevated his price objective to $86 from $75 while maintaining his Buy recommendation.
He emphasized that Block anticipates 18% gross profit growth throughout 2026, despite implementing a 40% staff reduction, and that adjusted operating income margin is projected to climb to 26% from the previous year’s 20%.
Wall Street’s collective consensus on XYZ stands at Strong Buy, comprising 24 Buy ratings, two Holds, and one Sell recommendation.
The mean price objective among analysts stands at $86.08, implying approximately 58% upside potential from present trading levels.
Block has issued guidance for 18% gross profit growth during 2026, with Q4 2025 performance already demonstrating momentum in that trajectory.
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