Block's Big Trim: Dorsey Initiates Cost-Cutting Layoffs

Block’s Big Trim: Dorsey Initiates Cost-Cutting Layoffs

Time Stamp: January 31, 2024 5:32 AM
Block's Big Trim: Dorsey Initiates Cost-Cutting Layoffs PlatoBlockchain Data Intelligence. Vertical Search. Ai.

The payments and
crypto company Block, led by the CEO, Jack Dorsey, has started laying off employees
this week as part of a cost-cutting plan announced late last year, according to
a source familiar with the matter quoted by Reuters.

The company
stated in November 2023 that it aimed to reduce overall staff levels from
around 13,000 to 12,000 by the end of 2024. The layoffs taking place represent its initial progress towards that goal through a combination of
performance-based adjustments and other restructuring moves.

“We
have identified a number of areas where we expect to find savings such as real
estate, process improvements using automation and discretionary spend,” Amrita
Ahuja, the Chief Financial Officer at Block, commented a few months ago.

Block has
said its rapid employee growth has surpassed expansion in its core business and
revenues. The broader technology sector has seen numerous layoffs recently amid
a shaky economy and rising interest rates.

While the
exact number involved in this week’s job cuts is unknown, Block has reiterated
its commitment to reaching the 12,000 target by next year. The reductions are
expected to generate cost savings in areas like real estate and discretionary
spending.

Brokerages Upgrade Block’s
Ratings

Despite the
layoffs, Block’s stock price showed little change on Tuesday. Firstly, the
chart tested a year-to-date high above $71 but fell 1.1% at the end of the day
to $68.2.

Some
analysts view the increased focus on costs and profitability positively,
potentially opening up Block’s shareholder base. However, other observers warn
it could hinder top-line growth.

“We
think Block’s increased focus on costs and bottom-line aligns well with
shareholders and opens the company up to a larger investor base,” BTIG’s
analysts commented in the client’s note.

Although
layoffs in the cryptocurrency and fintech industries have calmed down in recent
months, they were a leading theme throughout 2022 and 2023. Companies like
KuCoin announced plans for a 30% reduction in their workforce, while Robinhood
reduced its employee count three times. Luno, at the beginning of last year,
let go of 35% of its staff, similar to the Coinbase exchange .

Payment Company with
Crypto Exposure

Block,
owned by Jack Dorsey, is on the list of the largest publicly traded companies holding
Bitcoin. While MicroStrategy leads the pack with over $8 billion in BTC, the
former Square is currently in seventh place.

It has over
8,000 tokens, valued at $342 million. One of the larger BTC purchases occurred
nearly three years ago, when the publicly listed firm bought $170 million worth
of BTC, paying an average of $51,000 per Bitcoin.

The payments and
crypto company Block, led by the CEO, Jack Dorsey, has started laying off employees
this week as part of a cost-cutting plan announced late last year, according to
a source familiar with the matter quoted by Reuters.

The company
stated in November 2023 that it aimed to reduce overall staff levels from
around 13,000 to 12,000 by the end of 2024. The layoffs taking place represent its initial progress towards that goal through a combination of
performance-based adjustments and other restructuring moves.

“We
have identified a number of areas where we expect to find savings such as real
estate, process improvements using automation and discretionary spend,” Amrita
Ahuja, the Chief Financial Officer at Block, commented a few months ago.

Block has
said its rapid employee growth has surpassed expansion in its core business and
revenues. The broader technology sector has seen numerous layoffs recently amid
a shaky economy and rising interest rates.

While the
exact number involved in this week’s job cuts is unknown, Block has reiterated
its commitment to reaching the 12,000 target by next year. The reductions are
expected to generate cost savings in areas like real estate and discretionary
spending.

Brokerages Upgrade Block’s
Ratings

Despite the
layoffs, Block’s stock price showed little change on Tuesday. Firstly, the
chart tested a year-to-date high above $71 but fell 1.1% at the end of the day
to $68.2.

Some
analysts view the increased focus on costs and profitability positively,
potentially opening up Block’s shareholder base. However, other observers warn
it could hinder top-line growth.

“We
think Block’s increased focus on costs and bottom-line aligns well with
shareholders and opens the company up to a larger investor base,” BTIG’s
analysts commented in the client’s note.

Although
layoffs in the cryptocurrency and fintech industries have calmed down in recent
months, they were a leading theme throughout 2022 and 2023. Companies like
KuCoin announced plans for a 30% reduction in their workforce, while Robinhood
reduced its employee count three times. Luno, at the beginning of last year,
let go of 35% of its staff, similar to the Coinbase exchange .

Payment Company with
Crypto Exposure

Block,
owned by Jack Dorsey, is on the list of the largest publicly traded companies holding
Bitcoin. While MicroStrategy leads the pack with over $8 billion in BTC, the
former Square is currently in seventh place.

It has over
8,000 tokens, valued at $342 million. One of the larger BTC purchases occurred
nearly three years ago, when the publicly listed firm bought $170 million worth
of BTC, paying an average of $51,000 per Bitcoin.

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