XYZ Earnings Preview: 86% GP Growth, 28% SEC Risk

The Core Question

Block's gross profit has accelerated from +9% to +14% to +18% YoY through 2025, yet the stock is down 37% from its 52-week high. Management raised guidance three consecutive quarters. At ~3.2x GP, the market prices only 8-12% growth against delivered 15-18%. Is the discount a rational option-value adjustment for SEC/DOJ risk and untested lending — or a mispricing?

Our six-lens analysis ran 81 LLM calls across accounting integrity, regulatory exposure, revenue durability, competitive position, narrative-reality gap, and tail risk. Read the full analysis here.

Ensemble Forecast

Key Market

Q4 GP Growth ≥15% YoY

Probability

86%

Model Agreement

0.94

Strong consensus

Our nine-model ensemble assigns 86% probability that Block's Q4 2025 gross profit growth exceeds 15% YoY — extending the acceleration pattern through a fourth consecutive quarter. The GP trajectory (+9% → +14% → +18%) against three consecutive guidance raises makes this the most immediate test of the narrative-reality gap the Myth Meter classified as DISCONNECTED. Meanwhile, the ensemble assigns 28% probability of SEC/DOJ formal enforcement action, the largest single uncertainty across all six lenses. See all nine active markets on the XYZ forecasting page.

Earnings Scorecard — February 26

Q4 Gross Profit Growth (YoY)

Bull: >18%Bear: <15%

86% probability at 0.94 agreement. GP accelerated +9% → +14% → +18% through 2025. Above 18% extends the acceleration; below 15% narrows the narrative gap and suggests the market's skepticism may be warranted. Resolves directly from Feb 26 earnings.

Borrow Loss Rate

Bull: <2.5%Bear: >3%

15% probability of breach at 0.93 agreement. The Black Swan Beacon flagged this as the highest fragility assumption: $22B+ originations on E1 evidence quality. A breach above 3% would cascade across 4 lenses simultaneously, shifting ACCOUNTING_INTEGRITY and REVENUE_DURABILITY.

Square GPV Growth (YoY)

Bull: >12%Bear: <10%

68% probability of sustaining 10%+ at 0.95 agreement. GPV accelerated +7.2% → +10% → +12% through 2025. Continued acceleration contradicts the competitive decline narrative; deceleration would validate Stripe Terminal pressure and the NARROWING competitive trajectory.

Cash App MAU

Bull: >58MBear: <57M

71% probability of holding above 57M at 0.95 agreement. MAU has plateaued at 57-58M for 12+ months. Growth comes from monetization depth (+25% GP/user), not user expansion. A decline toward 55M would signal active erosion from PayPal and Apple Pay competition.

SEC/DOJ Disclosure

Bull: No updatesBear: Wells notice

28% enforcement probability at 0.92 agreement. Investigation open 3+ years with a July 2024 follow-on inquiry. A Wells notice would trigger the Compliance Cascade scenario (P/GP compression from 3.2x to 2.0-2.5x). Continued silence preserves the status quo but does not resolve the overhang.

Current Assessment

Block is classified at “Price Below Value” with medium confidence. The operational thesis is strong: GP acceleration, guidance raises, and 68% probability of sustained merchant growth. The discount reflects a rational tail-risk adjustment — SEC enforcement at 28%, Afterpay impairment at 30%, and untested lending on E1 evidence quality. Read the full six-lens analysis. We will update within 24 hours of the February 26 earnings release.

Six-lens analysis covering accounting integrity, regulatory exposure, revenue durability, competitive position, narrative-reality gap, and tail risk — plus nine active prediction markets

XYZ Full Analysis XYZ Forecasts