Billionaire Jack Dorsey’s Block surged in premarket trading on Friday, after he announced the financial tech firm would cut its workforce nearly in half as he anticipates AI to increase efficiency, leading companies to reduce headcount.
Key Facts
- Shares of Block soared 19.3% in premarket trading to just over $65, pacing what would be the stock’s largest intraday gain since February 2022 (26.1%).
- Block—owner of online payment apps Cash App, Square, Afterpay and more—on Thursday reported 24% year-over-year growth in gross profits to $2.87 billion, fueled by 33% growth in Cash App’s gross profit to $1.83 billion.
- Dorsey, in a letter to shareholders as part of Block’s quarterly earnings report, said the company would cut more than 4,000 employees, reducing the company’s workforce by nearly half.
- “Intelligence tools have changed what it means to build and run a company,” Dorsey said, adding a “significantly smaller team” can “do more and do it better” by using tools the company has built, while “intelligence tool capabilities are compounding faster every week.”
- Dorsey said he believed companies that have yet to reduce their headcount as AI increases workforce efficiency are “late,” and that he believes a “majority of companies” will make similar structural changes.
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