The Mirage of the Turnaround
Block Inc. (SQ) is currently trading at $88.42 as of the market close on November 24, 2025. This represents a 14 percent climb from its August lows, but the celebration is premature. While retail investors are cheering for a supposed turnaround, the underlying mechanics of the Q3 2025 earnings report reveal a business in the midst of an identity crisis. The firm is no longer a payment processor; it is a leveraged Bitcoin holding company with a decaying fintech attached to it.
Jack Dorsey has spent the last eighteen months stripping away the ‘Square’ brand’s independence to force an integration with the TBD and Bitkey initiatives. The cost of this pivot is becoming clear. While Cash App continues to drive the top line, the original Square merchant ecosystem is bleeding market share to specialized rivals like Toast and Clover. According to the Block Q3 10-Q filing, merchant volume growth in the micro-seller segment has flatlined at 2 percent year-over-year, the lowest in the company’s history.
The Bitcoin Margin Trap
The numbers do not lie. Block’s gross profit for the quarter ending September 30, 2025, hit $2.25 billion, but the composition of that profit is fragile. Cash App contributed $1.31 billion of that total, heavily bolstered by Bitcoin transaction fees. However, as Bloomberg market data indicates, Bitcoin’s late 2025 volatility has forced Block to increase its capital reserves, tying up cash that should be used for product innovation. The ‘Rule of 40’ metric, which Dorsey frequently cites to appease institutional analysts, is being achieved through aggressive headcount reductions rather than organic operational efficiency.
The Competitor Fallacy
Previous analysis incorrectly cited Square as a competitor to Block. To be clear: Square is the merchant-facing arm of Block. The real competition is coming from outside the house. In the 48 hours leading into November 25, 2025, reports from Reuters Finance suggest that Apple Pay’s new ‘Tap to Pay’ for small businesses has captured 4 percent of the market previously held by Square’s hardware. Block is fighting a two-front war: defending its hardware moat against Apple and its digital wallet dominance against a resurgent PayPal.
The risk profile is asymmetric. If Bitcoin remains above $90,000, Dorsey looks like a visionary. If it retraces to $60,000, the Cash App ecosystem loses its primary engagement hook. The ‘catch’ in the current $88.42 price target is the assumption that the merchant side will stabilize. There is zero data to support this. Merchant churn in the restaurant sector has increased by 150 basis points since January, largely because Block’s ‘all-in-one’ pricing is no longer competitive against specialized SaaS solutions.
Technical Breakdown and Institutional Skepticism
Institutional ownership has shifted. While Cathie Wood’s ARK remains a vocal supporter, three major pension funds liquidated 15 percent of their SQ holdings in early November. They are moving toward ‘pure-play’ fintechs that don’t carry the balance sheet risk of Dorsey’s crypto-treasury. The technical setup is equally concerning. The stock is currently hitting a wall of resistance at the $90 psychological level. Without a significant beat in the Square ecosystem’s transaction volume, there is no fundamental catalyst to break through.
| Metric | Q3 2024 Actual | Q3 2025 Actual | Change (%) |
|---|---|---|---|
| Total Gross Profit | $1.90B | $2.25B | +18.4% |
| Square GPV (Gross Payment Volume) | $56.0B | $57.1B | +1.9% |
| Cash App Monthly Actives | 55M | 61M | +10.9% |
| Bitcoin Revenue | $2.42B | $3.10B | +28.1% |
The table above highlights the divergence. The legacy Square business (GPV) is essentially stagnant, growing at less than 2 percent. Meanwhile, the top line is being pumped by Bitcoin revenue, which carries notoriously low margins. This is a classic ‘hollow’ growth story. The market is pricing Block as a high-growth fintech, but the core engine is idling in the parking lot while the driver plays with digital gold.
The next critical milestone occurs in February 2026, when Block must report its full-year 2025 GAAP operating income. If the company cannot show a path to consistent profitability without the ‘one-time’ benefit of Bitcoin price appreciation, the current $88 support level will collapse. Watch for the December 15 consumer spending report; any dip in holiday retail volume will hit the Square seller segment first, potentially triggering an early exit for institutional whales.
