Block Inc (ASX: XYZ) shares were the biggest winners on the ASX on Friday with a gain of 28%. Investors appeared pleased with Block's latest earnings update and announcement that it would cut 4,000 jobs.
During Monday morning trading, the ASX stock lost some of Friday's gains, 4.7% at $89.74.
Over the past 6 months, Block shares are down around 23%, reminding investors just how volatile Block can be.
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Easy money management
Block is the company behind Square, Cash App, and Afterpay. Its goal is simple: make moving and managing money easier outside the traditional banking system.
The $54 billion ASX share provides digital payments technology to small businesses, peer-to-peer transfers, banking-style services to consumers, and buy now, pay later solutions through Afterpay.
The latest result gave investors something to cheer. Gross profit rose solidly year on year, Cash App continued to grow, and management lifted full-year guidance.
For the full year that ended 31 December 2025, gross profit increased 17% to US$10.36 billion. This reflects a 21% jump in Cash App gross profit to US$6.34 billion and a 9% lift in Square gross profit to US$3.94 billion.
AI will replace 4,000 cut jobs
Just as importantly, Block announced it would cut more than 4,000 roles as part of a push to streamline operations and lean more heavily on AI. The market clearly liked the focus on efficiency and margin improvement and jumped at Block shares.
There are real strengths here. Block has a large and engaged user base, strong brand recognition in digital payments, and an ecosystem that links merchants and consumers. If it can keep growing gross profit while tightening costs, operating leverage could drive stronger earnings over time.
Fierce competition, regulatory scrutiny
But risks remain. Competition in payments and digital wallets is intense. The buy now, pay later (BNPL) sector faces regulatory scrutiny and credit risk, especially if consumer spending slows. Profitability has also been inconsistent, and investor confidence has been shaken during previous sell-offs.
So, are Block shares back in play? The 24.7% upswing in the past 5 days suggests sentiment is improving. However, the real test will be whether management can turn cost cuts and AI investment into sustained profit growth. If execution improves, the current pullback could look like an opportunity. If not, volatility may stick around.
What next for Block shares?
Analysts are pretty bullish on Block shares. TradingView data shows 2 out of 3 analysts have a strong buy rating on the stock, and one has a hold.
The maximum target price is $256, implying a massive 172% upside for investors at the time of writing. Even the average $163.67 target price represents a potential 74% gain for investors over 12 months.
