Block Inc. (XYZ) Shares Soar 20% Premarket on Aggressive Cost Cuts and Strong Guidance

Block Inc. (NYSE: XYZ), the fintech giant behind Square and Cash App, is making waves on Wall Street this Friday morning after announcing one of the most dramatic corporate restructurings in recent memory. CEO Jack Dorsey revealed plans to slash the company’s workforce by approximately 40%, reducing headcount from over 10,000 to just under 6,000 employees, as part of a sweeping pivot toward an AI-powered operating model.

The announcement, paired with better-than-expected guidance for both Q1 and full-year 2026, sent shares surging roughly 18% in premarket trading on February 27, 2026. The market’s reaction underscores growing investor appetite for leaner, technology-driven business models in the fintech space.

Restructuring Signals Shift Toward an AI-Native Fintech Model

At the heart of Block’s surge is a decisive strategic bet: that artificial intelligence can replace a significant portion of the company’s human workforce while simultaneously improving output and efficiency. In his letter to shareholders, Dorsey framed the thesis plainly, arguing that intelligence tools have fundamentally changed what it means to build and run a company, and that a smaller team using those tools can accomplish more and do it better.

The market responded with immediate and overwhelming enthusiasm, viewing the move as a credible path to the kind of margin expansion that has long eluded the company. Block is repositioning itself not just as a payments processor, but as a next-generation AI-native fintech platform.

Alongside the workforce announcement, Block delivered guidance that meaningfully topped Wall Street expectations. For Q1 2026, the company projected gross profit of $2.80 billion against a consensus estimate of $2.72 billion, and adjusted operating income of $600 million versus the $572 million estimate.

For the full year, Block guided for gross profit of $12.20 billion, ahead of the $11.9 billion consensus, and adjusted operating income of $3.20 billion, significantly surpassing the $2.70 billion estimate and implying a 26% adjusted operating margin. That level of profitability represents a major milestone for a company that was posting losses just two years ago.

Q4 2025 results, while largely in line with expectations, provided additional support for the bullish narrative. Gross profit climbed to $2.87 billion, topping the $2.74 billion consensus estimate and representing 22% year-over-year growth.

Cash App’s gross profit rose 33% year-over-year to $1.83 billion, while Square contributed $993 million, up 7%. Adjusted EPS of $0.65 matched analyst estimates exactly, and adjusted EBITDA came in at $930 million, slightly ahead of the $917 million Visible Alpha estimate.

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XYZ Stock Brief: Premarket Surge and Key Metrics

As of premarket trading at approximately 7:06 AM EST on February 27, 2026, XYZ shares were quoted at $64.99, representing a gain of $10.39 or roughly 19% above the prior session’s closing price of $54.53.

The stock had closed February 26 up 4.99% on the day at $54.53, meaning the after-hours and premarket reaction to the earnings and restructuring announcement has been swift and sustained. The premarket bid and ask of $64.26 and $64.69 respectively, with substantial volume on both sides, suggests strong institutional interest backing the move.

Despite the sharp premarket pop, the stock remains well below its 52-week high of $82.50, with a 52-week low of $44.27 providing context for just how much ground the shares had lost prior to this catalyst.

Year-to-date through February 26, XYZ had actually declined 16.22%, significantly underperforming the S&P 500’s gain of 0.93% over the same period. The one-year return of -16.48% stands in stark contrast to the S&P 500’s +16.00%, highlighting how dramatically sentiment had soured on the stock before this week’s announcement.

Wall Street analysts remain broadly constructive on the name. The average analyst price target stands at $83.93, implying meaningful upside even from elevated premarket levels. BTIG reiterated its Buy rating on February 27 with a $90 price target. The stock currently trades at a trailing PE of 10.97 and an EPS of $4.97 on a trailing twelve-month basis, with the next earnings date estimated for April 30, 2026.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.