Financial technology company Block will be laying off 4,000 employees as a smaller team using artificial intelligence is tipped to “do more and do it better” – boosting the company’s share price
(Image: AFP via Getty Images)
Financial technology company Block will be laying off 4,000 of its more than 10,000 employees as it looks to capitalise from artificial intelligence.
Shares in the company jumped more than 20% in premarket trading on Friday, February 27 after its CEO announced it was laying off more than 4,000 employees and reconfiguring to capitalize on its use of AI, The Associated Press reported.
“The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” CEO Jack Dorsey said in a letter to shareholders in Block, the parent company to online payment platforms such as Square and Cash App.
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“A significantly smaller team, using the tools we’re building, can do more and do it better,” he said.
Mr Dorsey’s comments about AI as a key driver behind the move were also posted on social media X, previously known as Twitter, a company he co-founded.
In a post on X, Mr Dorsey outlined various ways the company will support those laid off.
It was unclear which employees would be laid off in the San Francisco-based company, which operates in the United States, Canada, parts of Europe, Australia and Japan.
The comments that job cuts will add to Block’s profitability and efficiency led investors to buy shares, analysts said.
The Associated Press reported that Block’s shares gained 5% Thursday to $54.53, before it reported its fourth-quarter earnings. They shot up to nearly $69 in after-hours trading.
The mobile payments services provider posted a 24% rise in its fourth quarter gross profit, compares to one year earlier.
“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,” Stephen Innes of SPI Asset Management said in a commentary.