Block, Inc. (XYZ) announced a massive workforce reduction of approximately 40%, cutting headcount to around 6,000 employees, while simultaneously receiving significant stock price target upgrades from major Wall Street banks. The company, led by CEO Jack Dorsey, framed the cuts as a strategic move to leverage artificial intelligence for greater efficiency and to position for its "next phase of long-term growth." CFO Amrita Ahuja emphasized the margin improvement was driven by business improvements, not weakness.
The announcement, made alongside Q4 2025 earnings, sent Block's stock surging roughly 17% in pre-market trading on Friday. Morgan Stanley upgraded Block from Hold to Buy, raising its price target to $93 from $72. Analyst James Faucette cited "faster growth and an expanded TAM" due to product improvements and flexible pricing. He revised his 2026 EPS estimate up to $3.81 from $3.19 and his 2027 estimate to $5.19 from $4.10.
Bank of America also raised its price target to $86 from $75, maintaining a Buy rating. Analyst Jason Kupferberg highlighted Block's guidance for 18% gross profit growth in 2026 and an expected rise in adjusted operating income margin to 26% from 20%. Wall Street consensus on XYZ is a Strong Buy, with an average price target of $86.08 implying about 58% upside.
The news showcased Block's strong operational momentum. Cash App gross profit rose 33% in Q4 2025, with monthly active users reaching 59 million. Consumer lending originations jumped 69% year-over-year, and Cash App Borrow originations surged 223%. On the Seller side, gross payment volume has been accelerating since Q2 2025.
However, the AI-driven layoffs sparked fears of broader industry disruption, negatively impacting traditional financial firms. American Express (AXP) stock fell nearly 8% on Friday as investors questioned the vulnerability of established players to similar automation trends. The sell-off was accompanied by heavy put option activity, with a put-to-call ratio jumping to 2.6, indicating traders were bracing for further declines. AXP is now down 11.39% year-to-date.
