Josh Brown got burned by Twitter. Now, another Jack Dorsey-led name made its way onto his Best Stocks list
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Nobody on Wall Street trusts Jack Dorsey. Twitter never worked as an equity. Elon Musk bailing it out and folding it into his empire was a mercy killing for long-time shareholders. It was probably the best possible resolution for what had turned out to be one of the most important platforms in the history of the internet with one of the least profitable business models. Dorsey’s other company, Square — now known as Block (XYZ) — was always a better opportunity. It was payments, not social media, and unlike Twitter it had an important role in commerce and payments from its earliest days. During the pandemic, when transactions moved to phones and e-commerce, the stock became a screaming-hot momentum play. Dorsey had stepped away from Twitter to focus on his burgeoning fintech business and the backdrop was perfect for this story. And then Dorsey started doing Dorsey things. Notably, taking a paparazzi-accompanied stroll with Jay-Z down the beach in East Hampton that resulted in Block acquiring the streaming music service Tidal for $300 million — six times what Jay-Z had acquired it for in 2015. People looked at it like, “WTF is he doing that for?” The answer turned out to have been “no reason” as the business has been shoved aside and effectively written off. Sean’s going to get into a bit more detail on the current fundamentals, which are improving. There’s a turnaround underway but the price-earnings multiple is not giving Block much credit for it yet. Wall Street isn’t convinced that this time will be different. One of the main purposes of the research we do for the Best Stocks in the Market column is to force ourselves to reconsider our prior biases. My preconceived notion, having survived Twitter, is to never trust this guy again. The market is telling me I am wrong. Block made its way onto our Best Stocks list and it’s our responsibility to investigate and, if necessary, change our minds. Throwing away the emotional baggage from past trades is hard to do. Technicals give you the ladder to climb out of that hole and back into the sunlight. Sean’s going to talk about the turnaround and the company’s increased focus on profitability within their two core businesses, payments and peer-to-peer cash. I’ll be back with the chart. Best Stock Spotlight: Block, Inc. (XYZ) Sean — Remember Square? Formerly ticker SQ, the company went nuts in the 2020-2021 meme era as the stock jumped 250% in 2020. The company builds payments hardware and software for restaurants and small businesses and it also owns Cash App, a peer-to-peer payments system competing with Venmo. This company had a full-blown midlife crisis post-2020, as Josh mentioned. It renamed itself Block, bought a majority stake in the music streaming service Tidal (since deprioritized), loaded the balance sheet with bitcoin, paid up for buy now, pay later firm Afterpay at the top of the market and ceded ground to Venmo in the peer-to-peer payments space. Investors did not like what they were seeing. Block (now ticker XYZ) was down 26% in 2021, down another 61% in 2022, and after a brief bounce, was down 23% in 2025 while the market made new highs. The stock is now 72% below highs but nearing levels not seen since early 2022. This is still the early innings of what could be a turnaround story for the major fintech name. Block was making headlines recently on its unfortunate decision to lay off 40% of its employees. The headcount quickly expanded in the 2020s but has come down from over 10,000 to just under 6,000. Most of the side quests got shut down (Tidal) and the company refocused on the two ecosystems that actually make money — Square and Cash App and we’re seeing that focus hit the bottom line. In Q1 of this year, Cash App gross profit grew 38% year over year to $1.91 billion, monthly active users hit 59 million (the fastest growth in roughly 18 months) and “Cash App Borrow” originations grew 175%. On the hardware side, gross payment volume grew 13% to $61.2 billion, with food and beverage volume up 21% which was the strongest print since early 2023. CEO Jack Dorsey has also gone all-in on AI internally — production code shipped per engineer is up 2.5x from January to April and 70% of support inquiries are now automated. Management raised full-year 2026 guidance off the Q1 print with gross profit of $12.33 billion (up 19%), adjusted operating income of $3.34 billion at a 27% margin and adjusted EPS of $3.85, representing 62% growth over 2025. It’s worth mentioning that Stripe and Advent International reportedly made a $60.50/share ($53.4B) offer for PayPal this month. CNBC reported Block was contributing equity alongside Stripe and Advent, while Reuters reported Block approached PayPal with the group back in April but exited before the current offer was submitted. PayPal’s board reportedly views the bid as too low, so this is far from settled, but Block circling the parent company of Venmo would be major news for the Cash App vs. Venmo fight. On valuation, the market still isn’t paying top prices for this business. XYZ trades at roughly 15x forward earnings for a company guiding to 62% EPS growth over the next year. The market has a discount on this business, we’ll be watching price to tell us if this turnaround is real or not. Risk management Josh — I don’t trust this stock. The payments space has been absolutely brutal so if I’m playing here, I’m not anticipating any breakouts. I need to see it first. Block is trading at around $77 as the stock pulls back from its push toward the top of its range. This name broke a brutal downtrend that ran from well above $250 in early 2022 down into the $50s and $60s, spent roughly two years grinding through that range, and only recently pushed toward the top of it. The stairstep of higher lows is still intact, and this pullback is so far landing well above the 50-day moving average at $74, keeping that structure in place. The level that still matters most is $81, the recent swing high, and this pullback is a reminder of exactly why waiting for that close makes sense rather than buying into resistance. RSI sits at 51, right in the middle of its range, which fits a stock digesting its recent run rather than one breaking down. Nothing here suggests the base is at risk. Traders can watch $74 as the level that needs to hold for the higher low structure to stay intact, and can still wait for a close above $81 before getting involved. Investors can use the same patience, with the 200 day moving average at $68 remaining the line that would mark a real failure of the multi year base if this pullback were to extend that far. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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