BANGKOK (AP) — Shares in financial technology company Block soared more than 20% in pre-market trading Friday. This comes after the company’s CEO announced that the company would restructure its organization to maximize the use of artificial intelligence and lay off more than 4,000 of its more than 10,000 employees.
“The core theme is simple: The advent of intelligence tools has changed what it means to build and run companies,” Jack Dorsey said in a letter to shareholders of Block, the parent company of online payment platforms such as Square and Cash App. “The tools we’re building allow even fairly small teams to do more and do better,” he said.
Dorsey’s comments, which explicitly cite AI as the main driver behind this movement, were also posted on Twitter by Company X, which he co-founded. Analysts said investors’ claims that the layoffs would make the block more profitable and efficient led to a snap buy.
Block’s stock rose 5% to $54.53 on Thursday before the earnings release. In after-hours trading, the stock rose to nearly $69. The mobile payment service provider reported a 24% year-over-year increase in gross profit in the fourth quarter.
“For years we have been debating whether AI will squeeze jobs at the margins,” said Stephen Innes of SPI Asset Management, in a statement.
“Other major employers have announced tens of thousands of layoffs in recent months,” he said. “While some companies have downplayed the connection to AI, Mr. Block did not.”
Founded in 2009, Block is a global technology company based in San Francisco with operations in the United States, Canada, parts of Europe, Australia, and Japan.
In a post on Twitter, Dorsey outlined the various ways the company is supporting those who have been laid off. Conditions may be different for overseas employees, he said.
It is unclear which employees will be laid off and where.
layoff Block’s layoffs are the latest of thousands announced in recent months, although layoffs by U.S. companies remain at a relatively healthy level.
A number of other well-known companies have recently announced layoffs. UPS, Amazon, Dow and washington post.