Block added to S&P 500, Here’s Why It Matters.
Published
Block selected to enter the S&P 500, A major milestone we have been waiting for...
From Transactions to Infrastructure:
Block’s Next Chapter Begins
Block, ticker XYZ has officially been selected to join the S&P 500, a milestone we’ve been anticipating for some time. There are a series of steps to get here, including GAAP profitability, daily volumes, other key characteristics, and then eventually needs to be selected by the S&P committee... While headlines often focus on the symbolism, the real story here is pretty structural as passive investing now accounts for nearly 50% of all equity assets, up from ~20% just a decade ago. That means index inclusion is no longer just a signal, rather it is a source of sustained capital flows. Think trillions sitting in retirement accounts that are passively throwing capital into ETF's that simply track a benchmark. Right or wrong this means flows over fundamentals.
Block doesn’t just facilitate transactions, it owns the transactional and custody layers. This vertical integration gives them some level of margin control, defensibility, and user-level data (big in an AI world). It’s the digital equivalent of building both the interstate and the toll booths. Yes, the space is competitive, but the end market for payment software, hardware, and infrastructure is massive, and growing. Big fan of Robinhood, Sofi and traditional players like Visa/MA.
What continues to set Block apart is the ecosystem it’s building across commerce, payments, crypto, and infrastructure. We all know Cash App and its 50M+ active users. Millions of merchants use Square. But on the crypto side, Block now holds 8,584 BTC, worth over $1B at current prices, making it a top 15 public holder globally. If Bitcoin hits $1M (per Fundstrat’s Tom Lee, not our view), those holdings could be worth $15B–$25B, nearly half its current market cap. This embedded optionality touches every layer: Cash App users, Square sellers, and miners.
Here’s how Block’s vertical stack looks in a world of BTC:
Consumer – Cash App enables users to buy, sell, gift, and store BTC
Infrastructure – Bitkey (self-custody wallet) and Proto mining (BTC mining chips)
Merchant – Square POS integrates BTC payments for sellers
Treasury – Bitcoin held on the balance sheet and added via operations
The beauty is that all of this works with or without crypto.
Block’s balance sheet is also strengthening. Their senior bonds (Ba2/BB+/BBB-) now trade tighter than BBB-rated financial peers, reflecting its low net leverage and healthy cash position. Moody’s and Fitch have positive outlooks, and Block could reach investment-grade status within two years, further lowering its cost of capital. Entering the S&P only helps them here!
And finally, in a move that hints at broader ambition, Block became the first company in North America to deploy NVIDIA’s new GB200 systems, the most advanced AI chips available, for frontier model training. That’s a significant step, suggesting Block is not just building for today’s financial stack, but layering AI on top.
We’re excited about Block’s inclusion in the S&P 500, and more importantly, what lies ahead as it continues evolving into a payments and infrastructure compounder.
About Avory & Co.
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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.