To The Moon

Yesterday, it's reported that $Pepsi(PEP)$ plans to cut hundreds of jobs in North America. In addition, several food and beverage companies, including $Beyond Meat, Inc.(BYND)$ and $Coca-Cola(KO)$ also announced layoffs.

Generally speaking, mass layoffs are a bad sign for the economy. But in the current economic climate, layoffs at tech companies seem to mean higher stock prices.

• Is this true? Why is there a wave of mass layoffs?

$Meta Platforms, Inc.(META)$ stock price has fallen 71.5% since the beginning of 2022, and its market capn has evaporated by $700 trillion. But after announcing massive layoffs in November, the stock has risen by 20% so far.

A wave of layoffs has begun

On Nov. 9, $Meta Platforms, Inc.(META)$ said it plans to lay off about 13% of its employees, or about 11,000 employees.

On Nov. 14, $Amazon.com(AMZN)$ said it may lay off nearly 1 percent of its workforce, or about 10,000 employees.

$Lyft, Inc.(LYFT)$ also said it plans to cut about 700 jobs to reduce expenses.

Internet payments company Stripe, one of the world's most highly valued startups, also said it plans to lay off about 14 percent of its workforce.

As of Nov. 15, according to Challenger, Gray & Christmas and Bloomberg,

the number of the layoffs was about 31,000.

The impact of layoffs on companies?

Internet companies hired employees on a large scale during the pandemic. But in 2022, the impact of the pandemicgradually receded, and the Fed raised interest rates leading to higher borrowing costs.

1) Layoffs signifies company's correction

Redundant labor caused by over-recruitment becomes a "burden" for technology companies. Thus, layoff becomes a rational choice for companies and indicate companies is correcting the previous over-expansion.

2) Have short-term impact on the income

The layoffs have no impact on the long-term fundamentals of the company, but rather affect the short-term income statement. The layoffs will make the company's profit increase in the current quarter.

This is the 1 month performance of the companies that announced layoffs in Nov:

Do you think layoffs can help boost company's share price under current environment or not?

Share your thoughts in the comment section~