Key Highlights
- Morgan Stanley elevated Block (XYZ) to Buy status, increasing its price projection to $93 from $72, emphasizing accelerated expansion and broader market opportunities.
- The company revealed plans for a ~40% staff reduction, decreasing headcount to approximately 6,000 workers, with artificial intelligence taking over significant workload portions.
- Bank of America lifted its price projection to $86 from $75, emphasizing projected 18% gross profit expansion in 2026 and adjusted operating income margin climbing to 26%.
- Cash App gross profit increased 33% during Q4, monthly active accounts reached 59 million, and consumer lending originations soared 69% compared to the previous year.
- Analyst consensus for XYZ remains Strong Buy, with mean price projection at $86.08, suggesting approximately 58% potential appreciation.
Shares of Block experienced an approximately 17% surge during Friday’s pre-market session following CEO Jack Dorsey’s announcement regarding a substantial workforce reduction of roughly 40%.
This strategic restructuring will reduce total staff to approximately 6,000 individuals, with artificial intelligence technology handling much of the displaced workload.
James Faucette, an analyst at Morgan Stanley, promptly elevated XYZ from Hold to Buy status, establishing a fresh price projection of $93, representing an increase from the previous $72 target.
Faucette highlighted what he characterized as “accelerated growth trajectory and expanded total addressable market,” emphasizing that enhanced product offerings and more adaptive pricing strategies have unlocked previously untapped market segments for the fintech company.
His revised earnings per share projection for 2026 increased to $3.81 from $3.19, while the 2027 forecast rose to $5.19 from $4.10.
Morgan Stanley‘s $93 projection uses a multiple of 18 times the 2027 adjusted earnings estimate. The firm acknowledged this valuation might prove conservative considering anticipated revenue growth and approximately 26% earnings expansion projected for 2027.
In his shareholder letter, Dorsey disclosed that more than 4,000 workers are being terminated or entering consultation processes. CFO Amrita Ahuja characterized the workforce reduction as strategic positioning for Block’s “upcoming phase of sustained long-term expansion.”
Executive leadership emphasized that profitability improvements stem from operational excellence rather than reactive cost-cutting due to business challenges. This messaging resonated positively with market participants.
Strong Performance Across Cash App and Lending Operations
Cash App gross profit expanded 33% during the fourth quarter of 2025, while monthly active accounts increased to 59 million from 57 million in 2024.
The platform added 1 million primary banking active users during Q4 exclusively, elevating that metric to 9.3 million total.
Consumer lending originations experienced 69% year-over-year growth in Q4, with Cash App Borrow originations skyrocketing 223%.
Regarding the Seller segment, strategic pricing adjustments have attracted larger enterprise merchants and enhanced adoption of supplementary services. Seller gross payment volume has demonstrated consistent acceleration since the second quarter of 2025.
Consolidated gross profit rose 24% in Q4 2025 — representing significant recovery from the deceleration experienced between 2022 and 2024, when expansion had moderated to 18%.
Wall Street Supports AI-Driven Transformation
Jason Kupferberg from Bank of America increased his price projection to $86 from $75 while maintaining his Buy recommendation.
He emphasized that Block anticipates 18% gross profit expansion in 2026 despite reducing workforce by 40%, and adjusted operating income margin is projected to climb to 26% from 20% in the prior year.
Kupferberg identified the “central question” as whether a leaner, AI-enhanced workforce can successfully execute the growth strategy. Current market sentiment appears affirmative, he noted.
The Street’s aggregate consensus rating on XYZ stands at Strong Buy, comprising 24 Buy ratings, two Hold ratings, and one Sell rating.
The mean price projection among covering analysts stands at $86.08, implying roughly 58% appreciation potential from present trading levels.
Block’s management guidance calls for 18% gross profit growth throughout 2026, with Q4 2025 performance already demonstrating momentum aligned with this trajectory.
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