When share prices are swinging wildly up or down, it can cause headaches for investors who just want to make sense of it all. It might seem like there's a lot of noise. However, finding the signal doesn't have to be a difficult process.
Look at this growth stock, which has climbed almost 10% just over the past three weeks (as of March 20). The billionaire-led company made a drastic strategic move that's influencing shares. Is it a good long-term investment option?
Image source: Getty Images.
Artificial intelligence is impacting this innovative company's operations
On Feb. 26, Block reported its 2025 fourth-quarter (ended Dec. 31) financial results. Investors usually focus on key performance indicators, like gross profit, payment volumes, and active users. These figures provide valuable information that helps explain how the business is performing.
But the spotlight wasn't here. The announcement of a major corporate restructuring stole the market's attention. "We're reducing Block by nearly half, from over 10,000 people to just under 6,000," co-founder and CEO Jack Dorsey wrote in the shareholder letter.
Immediately following this announcement, Block shares popped as much as 24%. Investors were clearly signaling that they have become more bullish now that the company will run a tighter ship.
The reason Block feels confident enough to drastically shrink its headcount is because of the artificial intelligence (AI) tools it's building. Dorsey, estimated to have a net worth of $5.7 billion, felt that it was better to rip off the Band-Aid instead of gradually laying off employees over time.
AI's capabilities to automate various business tasks can push companies to make similar strategic decisions. However, Block might have also hired too aggressively earlier this decade, when the COVID-19 pandemic accelerated growth. Its headcount was 12,428 at the end of 2022, up significantly from 3,835 only three years before. Maybe it's just easier to blame AI advancements than what might have already been a bloated employee base.
NYSE: XYZ
Key Data Points
The fintech stock is well-positioned to succeed over the next five years
What should matter to investors is that this is a successful business. Gross profit jumped 24% year over year in Q4 2025. The two key segments, Square and Cash App, sell critical products and services that their customers need. And innovation remains robust.
Even better, Block's profits are surging. And they might get a further boost from the new focus on efficiency gains. Management expects adjusted diluted earnings per share to increase 54% in 2025. And they are forecast to rise at impressive rates in 2027 and 2028, according to consensus analyst estimates.
With shares currently trading at a forward price-to-earnings ratio of 16.1, Block looks like a good long-term investment option.
