Shares in Block, a prominent financial technology firm, experienced a significant surge of over 20% in premarket trading following an announcement from CEO Jack Dorsey regarding substantial layoffs. The company, which has more than 10,000 employees, will be letting go of over 4,000 staff members as part of a strategic shift to better leverage artificial intelligence in its operations.
In a letter to shareholders, Dorsey elaborated on the rationale behind this decision, stating, “The core thesis is simple. Intelligence tools have changed what it means to build and run a company.” He emphasized that a smaller team, equipped with advanced AI tools developed by Block, would enhance productivity and efficiency.
Dorsey’s remarks also reached a wider audience through a post on X, the social media platform he co-founded. According to market analysts, the announcement of job cuts aimed at bolstering Block’s profitability and operational effectiveness prompted a flurry of investor interest, leading to a buying spree for the company’s shares.
Prior to the earnings report, Block’s shares had already risen by 5% to $54.53. However, following the announcement, the stock jumped to nearly $69 in after-hours trading. The firm reported a notable 24% increase in its fourth-quarter gross profit compared to the previous year, adding to positive investor sentiment.
Stephen Innes of SPI Asset Management commented on the broader implications of Dorsey’s admission about AI’s impact on employment. He noted that while there was ongoing debate about AI affecting jobs, Block’s case serves as a public example where the CEO explicitly highlighted the connection. He pointed out that, unlike some other major employers that have also announced layoffs, Block did not shy away from acknowledging the role of AI in its workforce reduction strategy.
Founded in 2009 and headquartered in San Francisco, Block operates across several regions, including the United States, Canada, parts of Europe, Australia, and Japan. Dorsey outlined the company’s commitment to supporting those who will be laid off, although he mentioned that conditions might differ for employees located outside the United States. Details on which specific roles would be affected remain unclear.
Despite job cuts across various sectors, layoffs in American companies are currently at relatively stable levels. However, Block’s announcement adds to a growing list of high-profile companies, including UPS, Amazon, and Dow, that have declared significant workforce reductions in recent months.
