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Block Shares Soar After CEO Announces Major Layoffs, Citing AI Restructuring
BANGKOK – Shares in the financial technology company Block surged over 20% in premarket trading Friday following an announcement from CEO Jack Dorsey that the company would be laying off more than 4,000 of its 10,000-plus employees. The restructuring aims to capitalize on the integration of artificial intelligence within the company’s operations.
“The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” Dorsey stated in a letter to Block shareholders.
Block is the parent company of popular online payment platforms such as Square and Cash App. He further elaborated, “A significantly smaller team, using the tools we’re building, can do more and do it better.”
Dorsey’s comments, explicitly linking AI to the strategic job cuts, were also shared on X (formerly Twitter), a company he co-founded. Analysts suggest that the assertion of increased profitability and efficiency due to these cuts prompted investors to actively buy Block shares.
Prior to the earnings report, Block’s shares saw a 5% increase on Thursday, closing at $54.53. In after-hours trading, they then shot up to nearly $69. The mobile payment services provider reported a robust 24% jump in its fourth-quarter gross profit compared to the previous year.
Stephen Innes of SPI Asset Management commented on the development, stating, “For years, we have debated whether AI would dent jobs at the margin. Now we have a public case study in which the CEO explicitly says that intelligence tools have changed what it means to build and run a company.”
He added, “Other large employers have announced tens of thousands of cuts in recent months. Some have downplayed the AI link.
Block did not.”
San Francisco-based Block, a global technology company founded in 2009, operates across the United States, Canada, parts of Europe, Australia, and Japan.
In a separate post on Twitter, Dorsey outlined various support measures for the laid-off employees, noting that terms might differ for those overseas. Details regarding which employees would be affected and in what locations remain unclear.
While overall layoffs by American companies remain at relatively healthy levels, the job cuts at Block are part of a broader trend, with thousands of layoffs announced by high-profile companies in recent months. Other notable companies that have recently announced workforce reductions include UPS, Amazon, Dow, and the Washington Post.