Hello,

Welcome to our flagship newsletter, MarketBeat Daily Ratings.

We'll deliver the latest "Buy" and "Sell" ratings from Wall Street's top-rated analysts directly to your inbox each morning.

But first, we need you to do two quick things:

1. Hit reply, and send a simple "Yes." Just one word. This tells Google (and other emails providers) that you actually want to get our newsletter.

2. After that, this link to confirm your subscription. That will tell us that you received our welcome email and that we should start sending your daily report. 

Confirm your subscription here.

After you have completed these two steps, we would like to gift you a free copy of one of our most popular investing reports: 7 Stocks to Buy and Hold Forever. You can download the report with this link.

Thank you again for subscribing. We look forward to being an important part of your investing journey

Matthew Paulson
Founder and CEO, MarketBeat.

P.S. If you didn’t intend to subscribe, no problem—you can unsubscribe with this link.

(ARReply-161)

Block Makes a Federal Trust Bank Move That Could Reshape Its Fintech Model

Reported by Jeffrey Neal Johnson. First Published: 9/11/2026.

Fintech enterprises face a defining fork in the road once transaction volumes reach scale: continue paying tolls to third-party partner banks or secure a direct federal charter to bring more operations in-house. Many payment platforms see gross margins erode as sponsor institutions collect fees for the services they provide, while regulators are tightening scrutiny of informal partnerships.

Investors following financial technology have sought clear evidence that digital payments can move beyond low-margin processing to produce durable bottom-line earnings. Block, Inc. (NYSE: XYZ) addressed that question on Sept. 8, 2026, by filing an application with the Office of the Comptroller of the Currency (OCC) to form Builders Bank & Trust, N.A.

This SpaceX Partnered Firm Could Replace the ISS (Ad)

NASA has commissioned SpaceX to decommission the $150 billion International Space Station, but the contract to build its replacement is reportedly headed to a tiny firm a fraction of SpaceX's size, one NASA has quietly funded for five years.

History shows these NASA announcements can move fast: Intuitive Machines jumped 66% in a day, Momentus soared 155%, and Sidus Space climbed 180% after landing subcontractor roles.

See the full story before NASA's official announcement is made

By pursuing a national trust bank charter, Block is adopting a structural playbook pioneered by its digital banking peers. The move seeks to reduce third-party clearing friction, unify compliance under federal supervision and protect transaction economics across Cash App and Square, laying the groundwork for sustainable operating leverage. Securing direct regulatory authority would mark a major turning point for the modern financial platform.

Block Ditches the Sponsor-Bank Middleman

When SoFi Technologies, Inc. (NASDAQ: SOFI) completed its bank charter acquisition, the business altered its economic trajectory. Direct regulatory status removed intermediary partner fees, reduced funding expenses and established a direct path to consistent quarterly profitability.

Block is applying that same structural logic to digital assets, institutional custody and stablecoin infrastructure. Rather than operating solely as a consumer interface dependent on outside depository institutions, Block plans to manage custody directly through a federally chartered trust bank.

To lead the new bank, Block appointed Lee Woolley as president and chief executive officer. Woolley previously served as chief executive officer of the Treasury Department Federal Credit Union and held senior management positions at Northern Trust and BNY Mellon.

His operational experience brings institutional credibility and deep familiarity with federal bank supervision. Builders Bank & Trust, N.A., builds on the foundation established by Square Financial Services, an industrial bank chartered in Utah in 2020. Elevating digital asset custody to the federal level marks a deliberate evolution from a payment broker into foundational market infrastructure.

How Proprietary Clearing Widens the Margin Spread

Block operates at substantial scale, generating annual revenue of about $24.19 billion. Net profit margins remain tight at approximately 1.43%, producing about $1.31 billion in net income. A key contributor to fintech costs can be the network of third-party clearinghouses, custodian banks and partner institutions required to settle peer-to-peer transfers and merchant transactions.

Cash App supports considerable Bitcoin (BTC) volume, while the Square merchant ecosystem is integrating stablecoins for merchant settlement. Under external clearing arrangements, partner banks capture fees on transactions. Operating native fiduciary custody through Builders Bank would remove that intermediary layer, directing more fee revenue toward earnings before interest, taxes, depreciation and amortization (EBITDA).

That potential for improving operating leverage helps explain the sharp divergence between Block's historical and forward valuation multiples. The stock carries a trailing price-to-earnings (P/E) ratio near 141, reflecting historical investments in technology and acquisitions. The forward P/E ratio contracts to around 29.21. Wall Street analysts project annual earnings growth of roughly 35.66%, supported by an attractive price/earnings-to-growth (PEG) ratio near 0.85. Block's quarterly earnings report on Aug. 5, 2026, highlighted this bottom-line momentum, with adjusted earnings of $1.02 per share versus consensus expectations of 48 cents, along with a 9.3% year-over-year (YOY) revenue increase.

Bypassing the 50-State Money-Transmitter Trap

Operating a nationwide payments platform without a federal charter requires maintaining separate money-transmitter licenses (MTLs) across multiple state jurisdictions, depending on the activities involved. This fragmented system creates ongoing compliance filings, legal expenses and potentially conflicting regulatory requirements. Securing an OCC national trust charter would provide a consistent federal framework for the custody and fiduciary activities Builders Bank is authorized to conduct.

This federal oversight comes amid heightened regulatory scrutiny of informal Banking-as-a-Service (BaaS) partnerships. Enforcement actions against partner banks have disrupted non-chartered fintech platforms, exposing them to sudden operational halts. Operating directly under the OCC could reduce Block's reliance on partner institutions for activities housed within Builders Bank, reassuring users and commercial partners that digital assets reside within a federally supervised institution.

Builders Bank & Trust, N.A., would provide this protection while maintaining capital efficiency. Because the institution is structured as a non-depository, uninsured trust bank, it would not accept customer deposits or extend commercial loans. This charter structure would exempt Block from mandatory Federal Deposit Insurance Corporation (FDIC) assessments and shield the balance sheet from credit-default risk. Block maintains a conservative capital structure, with a debt-to-equity ratio of about 0.26 and strong liquidity reflected in a current ratio of roughly 2.21.

Why Wall Street Might Be Underestimating Block

Shares of Block trade near $80 in recent trading, consolidating after a year-to-date advance of roughly 22% from an opening price of $65.05. Across 41 equity analysts covering the stock, the consensus rating is Moderate Buy, with an average 12-month price target of $95.42, representing about 20% upside. Bull-case targets on Wall Street reach around $125.

Technical support has formed between $77 and $78, coinciding with healthy short interest levels that indicate limited short-seller pressure. Institutional investors maintain significant equity stakes, led by the California State Teachers' Retirement System at about 9.13% and BlackRock Inc. (NYSE: BLK) at roughly 2.74%.

Investors should balance this growth catalyst against notable risks. The OCC review process involves detailed examination, and final charter approvals typically require several quarters. A beta near 2.52 also makes the stock sensitive to broader macroeconomic pullbacks and cryptocurrency market volatility. Recent insider trading activity shows routine executive selling executed under prearranged Rule 10b5-1 trading plans near $80.80, including an open-market sale of about $463,800 by a director on Sept. 7, 2026.

Investors seeking exposure to financial technology infrastructure might view pullbacks toward support as an opportunity to build a position. Those with an intermediate time horizon can monitor forthcoming OCC milestones as tangible indicators of expanding operating leverage.