Block stock jumps over 24% after company announces 4,000+ job cuts

Block, Inc. said it is laying off more than 4,000 employees, which is almost half of its total staff. The company had over 10,000 workers earlier, and after the cuts it plans to have just under 6,000 employees, CNBC reported. CEO Jack Dorsey said in a letter to shareholders that this was a very difficult decision for the company.

Dorsey said the layoffs mean thousands of workers will either leave or enter consultation processes. CFO Amrita Ahuja said the job cuts are meant to prepare the company for its next phase of long-term growth. She explained that Block wants to change how it operates by using smaller teams and more AI tools to automate work.

Block stock jump

Dorsey said he believes many other companies will also soon make similar workforce changes because AI is making work more efficient. He also said he chose to make layoffs now instead of slowly cutting jobs over years to avoid hurting employee morale again and again. After the news, Block’s stock price jumped more than 24% in extended trading.

Block Layoffs

The layoffs were announced at the same time as the company’s fourth-quarter earnings report, CNBC reported. Block reported adjusted earnings of 65 cents per share and revenue of $6.25 billion, which was close to analyst estimates. For the full year, the company said it expects earnings of $3.66 per share, which is higher than analysts predicted. Because of the layoffs, Block expects to spend about $450 million to $500 million on severance pay, employee benefits, and share-related costs.

The company said most of these restructuring costs will happen in the first quarter. The stock closed at $54.60 and has fallen over the past few months and year, according to Investing.com. InvestingPro data said Block’s overall financial health is still rated as “good performance”.

FAQs

Q1. Why is Block, Inc. laying off employees?

Block is cutting jobs to reduce costs, use more AI tools, and prepare for future growth with smaller teams.

Q2. What happened to Block stock after the layoff news?

Block stock jumped more than 24% in after-hours trading after the company announced layoffs and earnings results.