According to CryptoPotato, BlackRock is expected to announce a significant downsizing of its workforce, with approximately 600 employees, or 3% of its global workforce, being laid off. The layoffs are being described as routine, in line with the company's previous practices. In 2023, BlackRock underwent a similar workforce reduction based on employee performance metrics. This decision comes after a period of substantial market recovery for the firm, with its shares increasing by 6% in 2023, following a 21% decline in 2022.
BlackRock is also set to announce its fourth-quarter earnings on Friday, with analysts projecting a 2.46% decline in earnings per share year-over-year. The firm ended the third quarter of 2023 with $9 trillion in assets under management (AUM), a decrease from its peak of over $10 trillion in 2022. Additionally, BlackRock is expected to receive approval from the Securities and Exchange Commission (SEC) for its new spot Bitcoin ETF on Wednesday, marking a significant venture into the crypto space and positioning the company at the forefront of digital asset investment.
Analysts speculate that the layoffs may be part of BlackRock's transition into a more mature phase of its business, as the company's decrease in AUM aligns with broader market instabilities and its embroiled status in political debates over its Environmental Social Governance (ESG) investing strategies. Due to the controversy surrounding its ESG approach in the U.S., BlackRock has been scaling back its emphasis on such business stateside, with U.S. portfolio managers no longer considering ESG metrics in non-ESG funds. Despite the scaled-back focus in the U.S., ESG remains a significant aspect of BlackRock's international business, with sustained demand for ESG investments from foreign clients, including large sovereign wealth funds in Europe and the Middle East. BlackRock plans to reallocate resources saved from the job cuts towards expanding in growth sectors like technology investing and alternative products beyond traditional stocks and bonds.
