BANGKOK (AP) — 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.
“The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” Jack Dorsey said in a letter to shareholders in Block, the parent company to online payment platforms such as Square and Cash App. “A significantly smaller team, using the tools we’re building, can do more and do it better,” he said.
Dorsey’s comments explicitly naming AI as a key driver behind the move were also posted 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.
Block’s shares gained 5% Thursday to $54.53, before it reported its earnings. They shot up to nearly $69 in after-hours trading. The mobile payments services provider reported its fourth quarter gross profit jumped 24% from a 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.
AP AUDIO: Fintech company Block lays off 4,000 of its 10,000 staff, citing gains from AI
AP correspondent Julie Walker reports on layoffs at one major fintech company due to AI, with predictions of more to follow.
“Other large employers have announced tens of thousands of cuts in recent months. Some have downplayed the AI link. Block did not,” he said.
A global technology company founded in 2009, San Francisco-based Block operates in the United States, Canada, parts of Europe, Australia and Japan.
In a post on Twitter, Dorsey outlined various ways the company will support those laid off. For employees overseas, the terms might differ, he said.
It was unclear which employees would be laid off where.
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.