The stock price of technology firm Block is soaring despite the company’s plan to lay off about half of its workforce.
Downsizing
In a letter to shareholders, Block CEO and co-founder Jack Dorsey said that the company behind Square, Cash App and Afterpay will reduce the number of its employees from over 10,000 people to just under 6,000.
Block will ask more than 4,000 people to leave or enter consultation. The company is downsizing as it sees an opportunity to operate faster with smaller teams that use AI to automate work.
AI-Related Changes
Dorsey said he believes the development is the right path for Block, citing that the company is changing how it operates because of intelligence tools.
“Intelligence tools have changed what it means to build and run a company,” Dorsey said. “We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”
Dorsey said that other companies will likely follow Block’s decision to take advantage of new tools to improve efficiency.
“Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I'd rather get there honestly and on our own terms than be forced into it reactively,” he said. “We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company.”
Block Share Price
Block announced that it is laying off half of its workforce along with its fourth-quarter earnings results.
In a post on the social media platform X, Dorsey said that Block is not in financial trouble. The company’s gross profits rose 24% from a year earlier to $2.87 billion.
“Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving but something has changed. “
The share price of Block jumped to a high of $54.80 on Thursday, up by 5.51% from the previous close of $51.94. The stock closed at $54.53.
