BlackRock, the world’s largest money management company, reportedly plans to announce layoffs for a total of 600 people, or about 3% of its global workforce.
The decision comes as BlackRock awaits approval from the U.S. Securities and Exchange Commission (SEC) for a spot Bitcoin exchange-traded fund (ETF).
The layoffs are described internally as routine, but come after a sharp increase in assets under management (AUM). News of the layoffs is expected to be announced within the next few days.
BlackRock Rationalization
The impending cuts of about 600 positions reflect BlackRock’s approach last year, when layoffs were aligned with employee performance indicators.
BlackRock’s stock price rebounded, rising 6% in 2023, despite falling 21% in 2022.
A BlackRock spokesperson declined to comment on the layoffs, according to a Fox Business report. The company is scheduled to report fourth-quarter results on Friday.
One potential reason for the layoffs is that BlackRock is transitioning its business into a more mature phase after several years of strong growth in assets under management (AUM). Analyst consensus for the fourth quarter is for earnings of $8.71 per share, down 2.46% from the same period last year.
As of the end of the third quarter of 2023, BlackRock’s AUM was $9 trillion, down from its peak of $10 trillion in 2022.
The decline in assets also coincided with BlackRock becoming the focus of political scrutiny due to its adoption of environmental and social governance (ESG) investing.
This strategy includes promoting corporate governance measures such as board diversity, while focusing investment funds on public companies in the sustainable energy sector or those actively working to reduce carbon emissions.
Still, BlackRock’s robust exchange-traded fund (ETF) business, which tracks baskets of securities and features products traded on major exchanges, has seen significant inflows of $187 billion.
BlackRock approves Bitcoin ETF
If the SEC approves the company’s application for a spot Bitcoin ETF, it would establish BlackRock as one of the top asset managers offering cryptocurrency investment products.
BlackRock expects approval on January 10, which would coincide with the SEC’s deadline to approve or reject the ARK 21 stock spot Bitcoin ETF.
In contrast, the SEC’s deadline for BlackRock’s Bitcoin ETF application is set for January 15. This follows a series of amendment forms submitted by recent spot Bitcoin ETF applicants.
On January 5, BlackRock joined other asset managers such as Valkyrie, Grayscale, Bitwise, Hashdex, ARK 21Shares, Invesco Galaxy, Fidelity, Franklin Templeton, VanEck, and WisdomTree to file a 19b-4 amendment to the application for a spot BTC ETF. . Same day.
While these filings represent an important step in the SEC approval process, filing an S-1 is essential for U.S. exchanges to list shares of investment securities with direct exposure to cryptocurrencies.