Afterpay owner Block (ASX:XYZ) has surged +27% on Friday after two big news items appear to have formed a winning combo for the company. Firstly, profits are up YoY to nearly $3B in its latest earnings, which is obviously a good news day by any yardstick.
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But there was another addition to that strong performance – Block used a letter released to the ASX on Friday to tell its own workforce, or at least nearly half of it, that they’ll be losing their jobs.
Block, looking at a staff count around 10,000, wants to bring that down to 6,000 – a bad day to be one of the 4,000 staff on the wrong side of that calculation.
To add insult to injury, yes, it’s an AI-based job slash – meaning that in the space of a week, both Block and WiseTech have announced massive job cuts, pointing to a preference to use AI instead. Notably, Block didn’t use the term AI much, dropping the “Artificial” part of the equation.
“The core thesis is simple … Intelligence tools have changed what it means to build and run a company,” a letter titled ‘To Our Shareholders’ and signed by the company’s CEO Jack Dorsey – formerly the head of Twitter – said.
“We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week,” the letter continued, signalling recent developments from Claude, the company behind the now-settling Agentic AI ‘scare trade.’
Dorsey even went so far as to suggest that, we’re hearing this once again, AI will be responsible for a revolutionary shift in how economies’ relationships to its workers will change.
“I don’t think we’re early to this realization. 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,” Dorsey wrote.
If that was an attempt to set up a vibe, it definitely worked. What remains to be seen is if Block will need to re-hire any of the 4,000 people it’s firing.
As for what that AI will be used for, Dorsey wrote that users will be able to “build their own features directly on top of our capabilities,” which will apparently change the nature of what Block is as a company.
If that looks like merchants being able to offer customers differing repayment schedules, then so be it, but this finance journalist wonders if that would really change “the nature” of Block. Then again, Dorsey is capable of being pretty savvy.
“We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company,” Dorsey’s letter concluded.
Whatever that means.
XYZ last traded at $93.58/sh.
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