Down 30% this year. Are Block shares finally a buy?

Block (ASX: XYZ) shares are in the red in Wednesday lunchtime trade. At the time of writing, the shares are down 6.6% are changing hands at $92.06 a piece. The stock has suffered a share price crash over the past month, dragging it down 18.39% for the period. Block shares are now 36.01% lower than this time last year.

What has happened to Block shares this year?

There has been no price-sensitive announcement out of the company recently to explain today's share price decline. The downturn is likely a continuation of heavy selling, which followed the company's September quarter results, released in early November.

The US-founded company, best known for providing payment-acquiring and related services to businesses, posted an 18% year-on-year profit increase for Q3. The company's Cash App gross profit was up 24% and its Square gross profit was up 9%. 

The company also boosted its full-year 2025 guidance. Block is now forecasting US$10.243 billion in gross profit for 2025, up 15% from 2024.

While the results look impressive, its sales and earnings figures missed Wall Street's forecasts. And while the company raised its forward guidance for annual gross profits, the improved target wasn't enough to prevent investors from selling up.

Does the latest price crash make for a good buying opportunity?

Some analysts are concerned that the company has exposure to credit risk and could suffer as a result of volatility in consumer spending. 

But it's important to note that Block's core business is strong, and its Square business has continued to grow. 

Commenting on the company's third-quarter results, CEO Jack Dorsey said: "Square GPV growth accelerated to 12% and we gained profitable market share through product innovation and expanded distribution. Cash App gross profit growth accelerated to 24%, and in September we hit 58 million Cash App monthly actives."

"This quarter, I want to outline how Square will continue to take market share by being the best platform to help sellers grow, run, and automate their businesses."

Analysts are pretty bullish on Block shares, too. TradingView data shows 2 out of 3 analysts have a strong buy rating on the stock. The maximum target price is $267, which implies a massive potential 188.99% upside for investors at the time of writing. Even the minimum $105 target price represents a potential 13.64% upside for investors over the next 12 months.

The post Down 30% this year. Are Block shares finally a buy? appeared first on The Motley Fool Australia.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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