Blocks spending rise despite 40% workforce cut leaves analysts weighing growth prospects
Quick TakeAnalysts remain bullish on Block following Q2 earnings beat, though Mizuho questioned why spending is rising despite a 40% workforce cut.Blocks stock was trading approximately 5% lower on Thursday morning. Jack Dorsey-led Block Inc is expected to increase its operating expenses in the second half of the year despite cutting roughly 40% of its workforce in February, leaving analysts to question whether the spending will translate into real growth. Mizuho estimates that Blocks adjusted operating expenses will rise from $4.48 billion in the first half to $4.56 billion in H2 based on the companys guidance. The banks analysts, led by Dan Dolev, said its own model suggested the workforce reduction alone could have lowered Blocks quarterly operating expenses by around 18%. “Although Blocks second quarter was very solid, a key question regarding operating expenses is still open,” the Mizuho analysts wrote in a Thursday note. Block (XYZ) tied the spending to initiatives it sees as offering potentially strong returns, including investments in sales, Cash App products and artificial intelligence infrastructure. Mizuho maintained its Outperform rating and $100 price target but questioned whether further investments might be needed to boost stagnating Cash App monthly active user numbers. William Blair analysts were a bit more bullish in