XYZ Stock: Why Has Cathie Wood’s ARK Ditched Block?

Block [XYZ] is a US-headquartered commerce technology firm.

Formerly Square, the company owns the Square, Cash App, Afterpay, TIDAL, Bitkey and Proto brands, offering one-stop exposure to offline and digital commerce, cryptocurrencies, buy now pay later, and peer-to-peer cash transfers.

With Cathie Wood offloading $29.1m worth of XYZ — over 500,000 shares — in two days, and the stock sitting near 18-month lows, Block does not look to be in a healthy place. What happened?

News from Block

Having taken place on March 11 and 12, Wood’s divestment is certainly sobering news, but it is not the only item impacting XYZ’s price.

Q4 2024 and FY 2024 earnings, announced on February 20, were lackluster, notwithstanding a 14% increase in gross profit year-over-year. 

The firm missed EPS estimates by $0.16 and Wall Street revenue targets by $227.72m. Its outlook for 2025, including 15% growth in gross profits, left analysts underwhelmed.

The results may have been behind Block announcement of a staffing restructure on March 26, following the 2024 reorganization that saw 1,000 jobs axed. This time around, more than 930 employees will be laid off. Additionally, 200 managers will be moved into non-management positions, and 800 open roles will be closed.

In more positive news, on March 13 Block received approval from the US Federal Deposit Insurance Corporation to offer small consumer loans through its Cash App Borrow product. 

This regulator recognition and expansion of Block’s lending capacity dovetails nicely with CEO Jack Dorsey’s vision of a central app that covers all consumer financial services.

How Has XYZ Fared?

XYZ has had a turbulent 12 months to April 4, closing down 36.9% over the period. This is despite a 71.74% rally between August 6 and December 6, 2024, powered in part by strong Q2 2024 earnings, favorable macroeconomic conditions and product expansion sparking investor optimism.

However, what went up came crashing back down in February 2025, with the stock plummeting following Q4 earnings to close down 24.33% by February 25. XYZ has been languishing near 18-month lows since.

The news of the Cash App Borrow approval provided some respite on March 13, with the stock rising 13.56% by March 19, but these gains proved short-lived. News of the restructure and reduction in the workforce powered a further dip.

The Digital Finance Landscape

The e-commerce and personal finance spheres are interlinked. This is reflected in our choice here of Shopify [SHOP] and PayPal [PYPL] as important competitors for Block.

Shopify, focusing on payment solutions for both digital and in-person retail, has a strong history of earnings beats, recording its 10th consecutive beat with Q4 earnings in February 2025.

As the figures below show, the firm is also set for explosive growth in 2025 — a not insignificant feat for a company of its size.

Source: Yahoo Finance

PayPal has attempted to synergize many of the disparate financial functions that Block is targeting. Offering both retail and personal payment options, the platform also has the PayPal Credit arm, which operates in a similar way to the Cash App Borrow function.

With much lower growth expectations — and a share price that has remained more or less flat since June 2022 — PayPal could offer a cautionary tale. Alternatively, Block could learn from what has not worked so well for PayPal, and offer a more comprehensive end-to-end experience.

Looking at the competition, then, it becomes clear that Block will have to corner a significant portion of the market in order to recover its success.

XYZ Stock: The Investment Case

XYZ is struggling in the market at the moment, but will new products be enough to see it weather the storm and regain the heady heights of 2021?

The Bull Case for Block

There were certainly some positives to be drawn from Block’s Q4 earnings report, and a solid product pipeline could be enough to excite investors going forward. On Seeking Alpha, three of 12 analysts tracking the stock rated it a ‘strong buy’, with eight rating it a ‘buy’.

In the digital world, new is almost always better, so investors might take comfort from the fact Block is continuing to innovate and expand its product base.

Cash App Borrow is one example of this. Additionally, with Proto’s bitcoin mining and artificial intelligence features being teased in the Q4 / FY 2024 shareholder letter, the firm seems willing to invest in continued product development.

Block makes no secret of its aim to integrate B2C and C2C transactions, as well as personal finance functions like short-term loans, into one central platform.

It has already taken some steps towards this. Integration could function as a flywheel going forwards. For example, a user who buys and pays later with Afterpay might move their bitcoin to the Bitkey wallet (if, of course, they have a positive experience).

In a market that hinges on cultivating a user base, this could work well for Block.

The Bear Case for Block

As ever, though, there are sizeable headwinds facing XYZ stock. From a hostile macroeconomic environment to struggling fundamentals, Block’s success is far from guaranteed.

Few stocks can escape the ongoing macroeconomic chaos.

Block’s commerce functions, namely those operating under the Square brand, require consumers to be purchasing. With consumer spending on discretionary categories falling, this might not yield the hoped-for results. 

While Wall Street analysts are largely optimistic on XYZ, Block’s 50-day moving average (DMA) recently crossed below its 200-DMA.

Often considered a warning, when paired with the fact the stock has barely moved in four years, this movement is unlikely to instill confidence.

Conclusion

Block is sitting in an interesting position, and the next three to six months will prove crucial in determining which direction the stock will move in.

There is a lot of potential in XYZ, but it remains to be seen whether or not the firm will be able to harness this effectively.