Why Payments Provider Block’s Stock Plunged Friday

Block (XYZ) shares slumped Friday after the fintech company’s quarterly results fell short of Wall Street’s expectations on the top and bottom lines.

The stock dropped close to 8%, making it one of the biggest decliners in the S&P 500 Friday. Read Investopedia’s full daily markets coverage here.

Block reported adjusted earnings of 54 cents a share on revenue that rose about 2% year-over-year to $6.11 billion in the third quarter. Both figures came in below analysts’ estimates. The payments provider’s gross profit grew 18% to $2.66 billion. Cash App’s 24% gross profit growth accounted for the majority of those gains, while gross profit at payments unit Square increased a more modest 9%.

Block raised its full-year guidance, citing strong trends across the business. The company now expects gross profit of $10.24 billion, up from its prior estimate of $10.17 billion. Block also boosted its forecast for full-year adjusted operating income to $2.056 billion from $2.03 billion. 

Still, investors focused on its earnings miss and rising expenses, including a nearly $70 million increase in general and administrative costs that the company attributed partly to “an in-person company event.” According to Block, general and administrative expenses would have been roughly flat year-over-year without that event. 

With Friday’s plunge, shares of Block have lost nearly one-quarter of their value since the start of the year.

This article has been updated since it was first published to reflect more recent stock prices.