Hey PayPal: Follow Block, Cut 40% Of Staff Tomorrow

If you do, shares will be well on their way to $60-70 overnight, in my opinion.

On Thursday, Block announced it is cutting roughly 40% of its workforce, more than 4,000 employees, with co-founder Jack Dorsey saying advances in AI tools allow a much smaller team to operate more efficiently.

He emphasized the company’s business remains strong and growing, but argued that “intelligence tools” make its previous staffing levels unnecessary. Investors responded immediately, sending shares of Block up roughly 24%. The message from the market was clear: structural cost reductions powered by AI are being rewarded with higher valuations.

Now consider PayPal. As I have discussed at length, the company already generates substantial free cash flow, operates at global scale, and has been actively repurchasing shares. Its valuation multiple remains compressed compared to historical levels and to some peers at barely 7.5x earnings. That combination creates leverage. When a lower-multiple company expands margins, the impact on earnings per share and sentiment can be magnified.

Payments businesses are particularly exposed to operational efficiency gains from AI. Fraud detection, risk modeling, customer service automation, compliance workflows, and internal engineering productivity are all areas where machine learning systems can materially reduce labor intensity. And with the Trump administration all but banishing the CTFC (at least for the time being) and being crypto friendly (read: not giving a single solitary fuck about banking regulations), now is the time to cut.

If PayPal announced a significant workforce reduction framed explicitly around AI productivity gains and paired it with a commitment to continue aggressive buybacks, investors would likely reprice the company based on a structurally higher margin profile rather than waiting for several quarters of reported results.

Markets move on forward expectations. When Block made its announcement, investors did not wait for audited proof of long-term savings; they priced in the anticipated margin expansion immediately. If PayPal signaled a similar structural reset, especially from a starting point of muted sentiment, a double-digit percentage move would not be unprecedented. A 20% rise would simply reflect a shift in the earnings trajectory and a modest expansion of its valuation multiple.

If a potential acquirer of PayPal saw this, they’d realize they are getting 20% of additional icing on top of whatever premium they pay as soon as they announced same, post-acquisition.

The buyback component amplifies this dynamic. Higher margins increase free cash flow. Continued repurchases reduce the share count. The combination accelerates earnings per share growth even if revenue growth remains steady rather than spectacular. That creates a self-reinforcing loop in which operational discipline feeds capital returns, which in turn supports valuation.

There are, of course, execution risks and reputational considerations around large-scale layoffs, and cost cutting alone does not create innovation or long-term competitive advantage. But the market reaction to Block demonstrated that investors currently reward decisive structural efficiency moves tied to AI adoption. Given PayPal’s scale, cash generation, and already discounted valuation, a comparable announcement could plausibly trigger a sharp upward repricing without requiring any takeover speculation.

This is not financial advice. Read my below disclaimer carefully.

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