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Block Inc.'s (NYSE:XYZ) third quarter may not have been as clean as investors hoped, but JPMorgan analyst Tien-tsin Huang isn't losing faith. The analyst called the third quarter results "not as straightforward as hoped, but still solid overall," and reaffirmed his Overweight rating on the stock with a $100 price target, arguing that "the right energy and pieces are in place" for Block to achieve the coveted Rule of 40 by 2026.
The company's quarter was a mix of momentum and margin noise — and yes, a $70 million company event that weighed on profitability. But Huang said the focus should be on improving trends in both Cash App and Square, which together form the backbone of Block's ecosystem.
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Cash App once again did the heavy lifting. Gross profit jumped 24% year over year — a sharp acceleration from 16% in the second quarter — driven by a 21-basis-point rise in monetization and a 134% surge in Borrow originations. Monthly transacting actives finally ticked up to 58 million after six flat quarters, and primary banking users hit 8.3 million in September, with another 400,000 added in October alone.
"We're encouraged to see monthly transacting actives increase," Huang said, noting that the app's growth flywheel — Borrow, banking, and engagement — is spinning faster.
Square's performance was softer, with gross profit up 9% and GPV up 12%, just ahead of forecasts. The margin drag from higher processing costs — tied to a new partner deal — continued to bite, but field sales momentum and mid-market strength offset some of the weakness.
"We believe momentum across the ecosystems remains intact," Huang said, calling Square's execution encouraging even amid operational headwinds.
The $70 million party might have trimmed the quarter's optics. Still, JPMorgan's view is simple: Block's ecosystems are accelerating, its user metrics are recovering, and its margins should normalize as temporary headwinds fade.
Investors hoping for a straight-line recovery won't find one here. But as Huang summed up, "we believe the right energy and pieces are in place."
For Block, that's a bet that 2026 could finally bring both profitability and a little discipline after the celebration.
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Posted In: XYZ
