Block shares surge up to 27% as Jack Dorsey announces plans to fire 4,000 people

Block shares surge up to 27% as Jack Dorsey announces plans to fire 4,000 people

• Block to cut 4,000 jobs, nearly half its workforce
• Shares surged up to 27% after layoff announcement
• Block invests in AI tools, posts higher profit and growth

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Shares of Jack Dorsey's Block surged up to 27% in post-market hours after he announced that his company is cutting 4,000 employees, nearly half its workforce, in a move the financial technology firm is describing as a bet on artificial intelligence changing the future of labor productivity.

Chief Executive Jack Dorsey said on X platform: “We're not making this decision because we're in trouble. 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. We're already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. And that's accelerating rapidly."

Dorsey said Block opted for a single deep round of cuts instead of multiple smaller layoffs over time. He said a smaller company would also give it space to grow the business the right way, instead of constantly reacting to market pressures.

Block has been restructuring its business model and staffing since 2024 as the company’s stock has lagged. At the same time, the company has invested heavily in AI tools to run more efficiently, including building its own tool called Goose.

The reduction in force, which was announced in a shareholder letter on Thursday, comes after rolling job eliminations that have often been tied to annual performance reviews.

Dorsey, the company’s co-founder, said in a call with analysts that he believes many companies will ultimately have to make similar moves due to AI.

“I don’t think we’re early to this realisation,” he said. “I think most companies are late. 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.”

Block posted an adjusted profit of 65 cents per share in the three months ended December 31, compared with 47 cents a year earlier.

Gross profit grew 24% in the quarter, driven by a 33% surge in the Cash App business, which enables peer-to-peer mobile payments.