Block CEO says AI is key driver behind mass layoffs
BANGKOK — Shares in the financial technology company Block soared more than 20% in premarket trading Friday after its CEO announced it was laying off more than 4, 000 of its 10, 000 plus employees, reconfiguring to capitalize on its use of artificial intelligence. Jack Dorsey said block is being reshaped because intelligence tools have changed what it means to build and run a company.
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Block layoffs and CEO letter
Jack Dorsey wrote in a letter to shareholders in Block that the company would reduce headcount by more than 4, 000 of its 10, 000 plus employees as it retools around artificial intelligence. He wrote, "The core thesis is simple. Intelligence tools have changed what it means to build and run a company. " He added, "A significantly smaller team, using the tools we're building, can do more and do it better. "
Why Block cited AI
Dorsey explicitly named AI as a key driver behind the move and posted his comments on X, or Twitter, a company he co-founded. The assertion that the job cuts will add to Block's profitability and efficiency led investors to jump in and buy, analysts said.
Market reaction and stock moves
Block's shares gained 5% Thursday to $54. 53, before the company reported its earnings; they shot up to nearly $69 in after-hours trading following the announcement. Shares had soared more than 20% in premarket trading Friday as investors reacted to the CEO's statements.
The mobile payments services provider reported its fourth quarter gross profit jumped 24% from a year earlier.
Analysts and industry perspective
Stephen Innes of SPI Asset Management commented on the development: "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 that "Other large employers have announced tens of thousands of cuts in recent months. Some have downplayed the AI link. Block did not. "
Support for affected employees
In a post on Twitter, Dorsey outlined various ways the company will support those laid off. He said that for employees overseas, the terms might differ. It was unclear which employees would be laid off where.
Company footprint and wider context
A global technology company founded in 2009, San Francisco-based Block operates in the United States, Canada, parts of Europe, Australia and Japan. Block is the parent company to online payment platforms such as Square and Cash App.
Layoffs by American companies remain at relatively healthy levels, but the job cuts at Block are the latest among thousands announced in recent months. A number of other high-profile companies have announced layoffs recently, including UPS, Amazon, Dow and the Washington Post.
Left: Square CEO Jack Dorsey in 2015 on the floor of the New York Stock Exchange. photo by Richard Drew/
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By Konstantin Toropin, Matt O'Brien,
