Block Inc’s stock surged up to 18% after CEO Jack Dorsey announced a workforce reduction exceeding 4,000 employees, representing 40% of staff. Dorsey cited the transformative impact of intelligence tools on company operations. The move aligns with a broader tech industry trend of restructuring around AI, as seen at companies like Salesforce and Pinterest. Block’s financials show improved valuation metrics but declining earnings growth, while profitability margins have increased.
Block Inc saw its stock surge as much as 18% after CEO Jack Dorsey announced mass layoffs at the company. The parent of Square and Cash App plans to lay off 40% of its workforce, or more than 4,000 employees.
“The core thesis is simple,” wrote Dorsey. “Intelligence tools have changed what it means to build and run a company.” He stated on the earnings call that a realization about AI’s capabilities occurred in December of last year.
“If there are any gaps in our usage of AI right now, it’s an application gap,” he said. The pop-off in the AI sector has fundamentally shaped how big tech views its workflow.
AI-focused workforce shifts are already a reality at other companies, not just Block. Salesforce cut roughly 4,000 customer-support roles last year because of AI advancements.
Pinterest has said it is laying off nearly 15% of its workforce to focus more resources on AI-related roles. As the sector grows, more jobs may be taken up by artificial intelligence to optimize performance.
Block’s valuation metrics improved, with the P/E ratio dropping from 117.06x to 30.29x in the last quarter. However, earnings growth plummeted by 53.95% while revenue growth stagnated at 0.30%.
Profitability is on the rise, with gross margins improving to 42.82% and operating margins reaching 7.06%. That profitability may continue to climb with the AI restructuring.
