Comment by DebtDeflation
10 hours ago
> the absurd overhiring that they did in 2022 and 2023
The overhiring took place from mid 2020 through mid 2022. The reversal into layoffs started in late 2022 and was in full swing in 2023. While the overhiring problem was real, the correction was largely complete over a year ago. The layoffs we're seeing today have nothing to do with overhiring and everything to do with managing earnings to sustain equity valuations.
> the correction was largely complete over a year ago
I am not sure how to be certain about this case, as the numbers (as far as I remember) still stayed higher than before. Moreover I do not think Blocks fired people back then?
But there is an extra factor, that around covid times hiring became signal for growth thus stocks went up after the hiring rates were announced, now firing is a signal for AI/efficiency, thus stocks go up when they fire people. It becomes easier to mass-fire people when it does not signal that there are problems going on (for the company).
I think it's a bit of both and perhaps 10% AI. Companies like Block are bloated for what they offer.
> managing earnings to sustain equity valuations
That's an interesting take, so eventually they'll just run out of these tricks and at that point the valuations will burst?
No, there'll always be a new trick.
That's what the MBA are paid for. New magic tricks.
Bingo. Yes. The trick, as usual, is timing the pop.
> the correction was largely complete over a year ago
We had tariffs and other disruptions since. So more correction is required.