Comment by reverius42
1 day ago
Based on that logic, layoffs should sometimes cause the stock of a company to go down, if the shareholders think those employees contributed more value than the company saves by laying them off.
In reality layoffs almost always cause the stock to go up. The market seems to think layoffs are an unalloyed good.
It’s also odd as it screams a different problem too.
If the employees were advantageous, I agree laying them off should be a long term negative as you seem to suggest.
Kinda like cheering the warmth of a burning bed on a cold night.
If they were inefficient/ineffective then management is crappy for not dealing with the problem sooner.
Sure, companies are resilient. But the first year or two of lost competence from layoffs can be quite rough…
Based on my personal experience and general observation, it seems like companies are both slow to hire, and slow to fire. So, paradoxically, both actions seem like they should signal "this company is going to be better in the future", because companies only either hire or fire when it is really obvious they should.
> Based on that logic, layoffs should sometimes cause the stock of a company to go down, if the shareholders think those employees contributed more value than the company saves by laying them off.
You are treating short-term stock market movements as a signal of how well the company is performing.
you still seem to be conflating layoffs with firing someone where you have to train their replacement.
there are numerous well known aphorisms about the irrationality of markets, so not sure why that should matter.