Block stock explodes after Jack Dorsey makes a radical bet

Core Viewpoint - Wall Street reacted positively to Block's announcement of significant layoffs, interpreting it as a move towards greater efficiency and profitability rather than a sign of distress [1][2]. Group 1: Layoff Announcement and Market Reaction - Block's CEO Jack Dorsey announced plans to cut over 4,000 jobs, reducing the workforce from over 10,000 to just under 6,000, which led to a 22% surge in the company's stock during after-hours trading [1][2]. - Prior to the announcement, Block's stock had fallen more than 16% year to date, but it reached $66.62 in extended trading, marking its best single-day performance since February 2022 [2]. Group 2: Efficiency and Profitability - Dorsey acknowledged that the company had over-hired during the pandemic and aimed to improve gross profit per employee from around $500,000 before the pandemic to over $2 million post-restructuring, representing a fourfold increase in efficiency [3]. - Block's Q4 2025 gross profit grew 24% year over year to $2.87 billion, surpassing analyst expectations of $2.74 billion, while adjusted operating income rose 46% to $588 million [4]. Group 3: Strategic Vision and Leadership - Dorsey emphasized that the decision to cut jobs was not a crisis response but a proactive measure to enhance operational efficiency, stating that the business remains strong with growing gross profit and customer numbers [2][5]. - He predicted that many companies would need to make similar structural changes in the near future, advocating for decisive action rather than gradual cuts to maintain morale and trust among stakeholders [6].