BlackRock Set to Trim Workforce by 3% Amid BTC spot ETF Approval Anticipation

Bits Logics Team . 07th Jan 2024

• BlackRock Plans 3% Global Workforce Cut Amid Market Challenges.
• Shares Rebound 6% in 2023; BlackRock Awaits SEC Approval for Bitcoin ETF.
• ESG Controversies and Maturing Business Pose Challenges for BlackRock.

BlackRock, the world’s largest money management firm, is gearing up to announce a round of layoffs affecting approximately 3% of its global workforce, equivalent to around 600 employees, sources familiar with the matter have revealed to Fox Business. 

The impending job cuts, yet to be officially disclosed, are characterized internally as routine, mirroring a similar strategy employed by the company in the previous year based on employee performance metrics.

While BlackRock shares rebounded in 2023 with a 6% gain after a 21% dip in 2022, the company is now facing the prospect of staff reductions. The asset management giant is scheduled to announce fourth-quarter earnings on Friday, and industry experts speculate that the layoffs may be linked to BlackRock’s transition into a more mature phase following years of robust growth in assets under management (AUM). Analysts anticipate a 2.46% year-over-year decline in earnings to $8.71 a share for the fourth quarter.

BlackRock concluded the third quarter of 2023 with $9 trillion in AUM, experiencing a decline from its peak of over $10 trillion in 2022 amid market uncertainties. The company has also faced challenges as it became a focal point of political discussions, particularly related to its embrace of Environmental Social Governance (ESG) investing. ESG strategies direct investment towards public companies in the sustainable energy sector or those actively working to reduce their carbon footprint while advocating for corporate governance measures such as boardroom diversity.

In a pivotal development, BlackRock is expecting approval from the Securities and Exchange Commission (SEC) for its new Bitcoin “spot” exchange-traded fund (ETF) on Wednesday. This marks the first time a cryptocurrency investment product, tracking the daily price of Bitcoin, is set to receive approval for trading on a public stock market. The approval comes amid a broader trend, as other asset managers also await regulatory clearance for their ETFs.

While a BlackRock spokesman declined to comment on the reported layoffs, the market will closely watch Friday’s earnings announcement for insights into the firm’s financial performance and strategic outlook. The evolving landscape, including regulatory milestones and market dynamics, underscores the challenges and adjustments facing BlackRock as it navigates a changing financial environment.