Has Block (SQ/XYZ) Delivered on Long-Term Value Despite Market Volatility?

The question of whether Block, Inc. (formerly Square, now trading under the ticker XYZ) has delivered long-term value despite its stock's dramatic volatility is one that demands a nuanced analysis of compounded returns, strategic business moves, and the interplay between market sentiment and corporate transformation. Over the past five years, Block's journey has been marked by extraordinary highs and punishing lows, reflecting both the opportunities and risks inherent in its ambitious vision to reshape the financial ecosystem.

Compounded Returns: A Mixed Bag

Block's stock has delivered a 5-year total return of 6.51% as of 2024, translating to a compound annual growth rate of 2.89%. This pales in comparison to its revenue growth, which averaged 44.4% annually from fiscal years 2020 to 2024. However, the disparity between revenue and total return growth underscores the challenges of translating top-line expansion into shareholder value. For instance, in 2020, the stock surged by 247.89%, driven by the pandemic-fueled shift to digital payments. Yet, this was followed by a 61.09% drop in 2022, reflecting broader market jitters over inflation and interest rates. By 2025, the stock had stabilized slightly, with a year-to-date return of 1.39%, but its 12-month total return remained negative at 27.18%.

The disconnect between revenue growth and shareholder returns is partly attributable to Block's evolving business model. While its revenue grew at a CAGR of 11% from 2021 to 2024, the company's ability to convert this into consistent profitability has been uneven. For example, Q3 2024 saw a revenue miss but a 19% year-over-year increase in gross profit, while Q3 2025 reported a 18.3% rise in gross profit to $2.66 billion. These fluctuations highlight the challenges of balancing innovation with profitability in a rapidly changing market.

Strategic Moves: Rebranding, Acquisitions, and Bitcoin

Block's strategic rebranding from Square to Block in December 2021 was intended to signal a broader vision beyond payments, encompassing blockchain, AI, and a diversified financial ecosystem. However, the stock initially fell 31% post-rebranding, a decline analysts attributed to broader market rotation out of growth stocks amid Fed rate hike fears according to market analysis. The rebranding also coincided with the 29 billion acquisition of Afterpay, a "buy now, pay later" (BNPL) platform, which was finalized in January 2022. While the acquisition aimed to strengthen Block's consumer offerings, its stock price dropped 41.5% on the ASX by 2025, reflecting skepticism about the integration's profitability.

Despite these challenges, Block's long-term strategy has shown resilience. The company has leveraged Afterpay's BNPL capabilities to drive engagement on Cash App, while expanding into Bitcoin mining and self-custody wallets like Bitkey according to recent analysis. These moves align with Jack Dorsey's vision of decentralizing finance, though they remain speculative. For example, Block's Bitcoin mining unit, Proto, generated its first revenue in Q3 2025, and the company plans to roll out Bitcoin payment features for merchants by 2026 according to strategic plans. Such initiatives aim to future-proof Block's ecosystem but carry inherent risks, particularly in a market where crypto volatility remains a wildcard.

Earnings and Valuation: A Tale of Two Metrics

Block's earnings reports have been a rollercoaster. Q4 2021 saw adjusted EPS beat expectations, yet shares fell 4% post-announcement. Similarly, Q3 2024 reported a revenue miss but a 19% rise in gross profit, while Q3 2025 delivered a 18.3% year-over-year gross profit increase. These mixed results have kept investors on edge, with the stock's price-to-earnings ratio (12.3x) trailing the industry average of 13.6x, suggesting potential undervaluation if sentiment stabilizes.

The company's valuation has also been influenced by its cost structure. Rising customer acquisition costs and credit risks in the Cash App Borrow and BNPL segments have raised concerns. However, Block's focus on AI-driven efficiency-such as its internal tool "goose," which boosted productivity-offers a counterbalance. Management's emphasis on automation and international expansion e.g., 15% year-over-year GPV growth in Square's international markets further underscores its commitment to long-term value creation.

Strategic Investment Timing: When to Buy the Dip?

For investors, timing has been as critical as the company's fundamentals. The stock's 61.09% drop in 2022 created a compelling entry point for those who could stomach the volatility. A 23.09% rebound in 2023 and a 9.88% gain in 2024 rewarded patient investors, though the 2025 YTD return of 1.39% suggests lingering caution. The key question is whether Block's strategic moves-particularly in Bitcoin and AI-can justify its current valuation.

Block's recent guidance for 10.243 billion in 2025 gross profit and its focus on returning capital to shareholders e.g., $1.5 billion in stock repurchases through September 2025 indicate a shift toward disciplined growth. However, the success of these initiatives hinges on macroeconomic factors, such as Fed policy and crypto adoption rates, which remain unpredictable.

Conclusion: A Work in Progress

Block's journey reflects the duality of innovation and volatility. While its 5-year total return of 6.51% lags behind its revenue growth, the company's strategic bets on BNPL, Bitcoin, and AI position it to capitalize on long-term trends in financial technology. The rebranding and Afterpay acquisition, though initially met with skepticism, have laid the groundwork for a diversified ecosystem. For investors, the challenge lies in balancing the company's transformative vision with the realities of market cycles. In the end, Block's ability to deliver sustained value will depend not only on its execution but also on the patience of its shareholders.