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.

Block Begins Previously Announced Staff Reductions

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.