The Block Inc (ASX: XYZ) share price is ending the week deep in the red.
In morning trade, the payments giant's shares dropped as much as 33% to a 52-week low of $61.42.
Its shares have recovered a touch since then but remain down 24% to $69.69 at the time of writing.
Why is the Block share price crashing?
Investors have been rushing to the exits after the company released a disappointing first quarter update and slashed its outlook for the rest of the year.
Block reported revenue of US$5.77 billion for the quarter, down 3% on the prior corresponding period and short of Wall Street's US$6.2 billion forecast according to CNBC.
And while its gross profit rose 9% to US$2.29 billion, this also missed expectations. Analysts had been looking for US$2.32 billion.
Making matters worse, Block issued softer than expected guidance for the second quarter and full year. This is due to an increasingly uncertain macroeconomic environment.
Management now expects second quarter gross profit of US$2.45 billion (consensus: US$2.54 billion) and full-year gross profit of US$9.96 billion (consensus: US$10.2 billion). Management commented:
We recognize we are operating in a more dynamic macro environment, so we have reflected a more cautious stance on the macro outlook into our guidance for the rest of the year. We now expect $9.96 billion in gross profit for 2025, for growth of 12% year over year.
We expect gross profit in the second quarter to grow 9.5% year over year to $2.45 billion and we expect to accelerate gross profit growth meaningfully in the second half of the year as we execute on our strategies to deepen engagement with Cash App customers as we expand Borrow and retroactive BNPL to more customers.
Stronger second half
Nevertheless, the Afterpay and Cash App owner's CEO, Jack Dorsey, remains positive on the future. He is expecting the company's performance to rebound in the second half and then continue into 2026. Dorsey said:
Our growth in the first half of this year does not meet our bar, and we remain confident in our ability to accelerate Block's gross profit growth in the second half of 2025 and beyond. Cash App gross profit growth came in below our expectations, largely driven by softer inflows and Cash App Card spend than we had forecasted. We saw changes to consumer spending as the quarter progressed that we believe drove the majority of our forecast miss.
The Block share price is now down 50% since the start of the year.
