Block Stock Soars: Bernstein Analyst Predicts 35% Surge by 2025
Payments processing giant Block (SQ), the parent company of Square, Cash App, and Afterpay, is poised for significant growth, according to a bullish prediction from Bernstein analyst Harshita Rawat. Rawat raised her price target on Block shares to $120, representing a potential 35% surge from Friday’s closing price. This optimistic outlook hinges on several key factors, including easing regulatory pressures, increased efficiency, and the potential inclusion of Block in the S&P 500 index. This forecast reflects a significant confidence in Block’s future, sending ripples through the financial markets and making it a compelling investment prospect for many investors.
Key Takeaways: Why Block is a 2025 Investment Darling
- 35% Potential Upside: Bernstein analyst predicts Block’s stock price could rise by 35% to $120 by 2025.
- Regulatory Tailwinds: Easing regulatory scrutiny for Cash App and Afterpay is expected to boost growth.
- Increased Efficiency and Growth: Rawat projects 30% EBITDA growth driven by operational improvements.
- S&P 500 Inclusion Potential: Block’s potential addition to the S&P 500 could significantly increase investor demand.
- Strong Growth Drivers: Initiatives like increased direct deposit penetration, growth in borrowing, and commerce initiatives within Cash App and Afterpay fuel the positive outlook.
Bernstein’s Bullish Case for Block: A Deep Dive
Rawat’s optimistic assessment is largely based on her expectation of a favorable regulatory environment in 2025 for Block’s key segments, most notably Cash App and Afterpay. Both have faced increased regulatory scrutiny recently, but Rawat believes this pressure will ease, unlocking significant growth potential. “Looking into 2025, we see potential for mid-teens gross profit growth driven by incentives around increasing direct deposit penetration (the #1 driver of long-term growth), growth in borrow and commerce initiatives (e.g., Cash App and Afterpay on Cash App Card),” she stated in her report. This points towards a strategic shift where Block is better positioned to leverage these services for enhanced revenue generation.
The Power of Direct Deposit and Beyond
Rawat highlights the pivotal role of direct deposit penetration as the primary driver of Block’s long-term growth. By incentivizing users to utilize direct deposit features within their Cash App, Block can strengthen user engagement and foster a more robust ecosystem. This integrated approach lays the groundwork for expansion into additional financial services, creating further revenue streams. Simultaneously, growth in borrowing and commerce initiatives, particularly within Cash App and the integration of Afterpay, will significantly enhance Block’s overall profitability. This diversification of revenue sources demonstrates a resilience that is crucial for long-term sustainability in a competitive financial technology market.
Square’s Growth Trajectory: A Key Component of the Forecast
The forecast also hinges on significant growth within Square, Block’s point-of-sale system. Rawat predicts Square’s gross payment volume (GPV) could increase by 2% to 3% in 2025. This is a substantial increase considering the already significant market share Square holds within the POS system market. Furthermore, the anticipated 30% EBITDA growth underscores Block’s commitment to operational efficiency. By streamlining operations and enhancing internal processes, the company will not only boost profitability but also reinforce its position as a leader in the fintech industry. This efficiency will help offset other potential pressures and ensure better margins.
The S&P 500 Wildcard: A Major Catalyst for Growth
The potential inclusion of Block in the S&P 500 index is another crucial factor driving Rawat’s optimistic forecast. Inclusion would represent a significant validation of Block’s success and attract a substantial influx of investment from index funds and passive investors who track the S&P 500. “Although it is hard to bake in a timing, we believe SQ now checks all the boxes for S&P inclusion,” Rawat commented. This statement reflects the increasingly strong position Block occupies within the financial technology sector. The potential market impact of this addition is considerable, as significant capital flows into the stock are expected upon inclusion. While the precise timing remains uncertain, the anticipation alone exerts significant upward pressure on the stock price.
Navigating Regulatory Hurdles: A Path to Success
While acknowledging the regulatory scrutiny facing Cash App and Afterpay, Rawat expresses confidence that this challenge will subside. This anticipated easing of regulatory pressure allows Block to focus on its core growth strategies without significant obstacles. The projection of substantial growth in both these segments relies heavily on this positive expectation. The ability to navigate these regulatory challenges strategically is pivotal in securing the brighter financial future envisioned by Rawat, further strengthening the positive outlook for Block’s investors. Essentially, the prediction hinges on the assumption that Block can successfully manage this regulatory aspect and unlock greater freedom to expand aggressively.
Block’s Market Performance and Future Outlook
Block’s stock has already shown impressive performance, increasing by 21.2% in 2025. However, this growth slightly trails the broader market’s rise, hinting at a potential for significant outperformance in the coming year based on Rawat’s projection. Monday’s 5%+ jump in share price illustrates the market’s immediate positive response to Rawat’s upgraded price target and bullish outlook. This indicates a strong level of investor confidence and anticipation of future gains. The combined effect of the factors mentioned above makes Block an exceptionally attractive prospect. The potential return on investment in this technology company positions it favorably against competitors within the payments processing and financial technology sectors.
Conclusion: A Promising Future for Block
Bernstein’s optimistic forecast paints a compelling picture for Block’s future. The confluence of factors – easing regulatory pressures, increased efficiency, a strong growth trajectory for Square, and the potential for S&P 500 inclusion – creates a potent catalyst for share price appreciation. While no investment is without risk, the analyst’s bullish outlook and compelling rationale suggest that Block is well-positioned for substantial growth and continued success in the dynamic world of financial technology. The positive outlook given by Rawat serves as confirmation for many investors who already considered Block a long-term asset. While some risks remain, the potential for a surge of 35% presents a significant incentive for both current and potential investors.
