Jack Dorsey struggles as Block's stock plummets 20%
- Block's first quarter earnings for 2025 revealed a 9% growth in gross profit, falling short of the 11% expected.
- The company's stock plummeted by 20% in response to these disappointing results.
- Jack Dorsey is implementing various strategies, including hiring sales reps and expanding Cash App services, to counteract the decline.
On May 1, 2025, Block, a fintech company led by CEO Jack Dorsey, faced significant challenges following its first quarter earnings call. The company reported a gross profit growth of only 9%, falling short by around $30 million of the expected projections. This growth rate was notably below the 11% forecasted and indicated a troubling trend in consumer spending, prompting a cautious approach towards the full-year growth forecast. As a result, Block's stock declined by 20%, positioning its valuation at $28 billion, which reflects a decline of 25% compared to five years ago. Over the past five years, Block's stock performance has been marked by volatility, closely following the patterns of competitor PayPal. Now, Jack Dorsey is pursuing strategies to revive the company's growth. These include enhancing internal efficiencies, innovating in Square’s point-of-sale offerings, and hiring a traditional sales force for Square, which aims to improve performance in their merchant business. CFO Amrita Ahuja highlighted that they launched a field sales initiative to place more localized representatives in the market to bolster sales efforts. Ahuja further noted that despite the decline, there were some promising signs of growth in processing volume, which saw a 9.6% increase in April. This is a more favorable trend than expected, suggesting that Block’s products might be gaining market share. Additionally, Dorsey aims to convert more Cash App users to enroll for direct deposit services, which is anticipated to enhance customer engagement and revenue through increased transactions on the app. Furthermore, Block is looking into expanding its lending businesses, including Cash App Borrow and Square Loans, which are projected to contribute 30% to 40% of the company's annual gross profit growth. The company is also venturing into the bitcoin hardware supply industry, which Dorsey believes could generate substantial revenue. He described the interest in creating accessible mining devices that could allow everyday consumers to engage in bitcoin mining. These efforts signify Block's commitment to diversifying its services despite the current stock downturn and seek long-term growth opportunities.