In the world of streaming, investors now have more options than ever to choose from when considering adding exposure. One of the companies many don’t often consider first in this space is Block (NYSE:SQ), which is the majority owner of music streaming service Tidal. Today, Tidal layoffs are the talk of the industry. The company announced that its latest round of job cuts will result in 10% of the company’s workforce being let go.
Layoff announcements are becoming more commonplace now, for many reasons. Expectations are that we could be in for some economic turbulence, or at least uncertainty, over the next year or two. Accordingly, companies across various industries appear intent on reducing cash-burn rates and improving their financials. Broadly, that’s been taken as a good thing by the markets.
Today’s broad rally in tech stocks and other high-growth areas of the market may overshadow this news, but it’s likely a driver of the 1% move higher we’re seeing in SQ stock today. Let’s dive into what investors may want to make of this layoff announcement.
What to Make of These Tidal Layoffs
Generally, this news appears to be seen as a welcome move for Tidal and, by extension, its parent company Block. The music streaming industry is one that appears to be increasingly focused on efficiency, and this move certainly has the potential to make Tidal a leaner and meaner growth machine.
That said, it’s also a relatively small piece of the entire Block portfolio. Therefore, it’s unclear to what extent this news is driving the parent company’s price action today. Those who use Tidal may want to note that these job cuts are coming mostly in the company’s division that handles the creation of playlists. That said, assuming the user experience remains the same, investors may look at these job cuts as a template for further action at Square.
Recent reports indicate that Block may trim around 1,000 jobs from its payroll by the end of next year. Thus, for investors seeking efficiency-focused stocks, it appears Block is among the companies to keep an eye on heading into next year.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
