Are the markets really celebrating mass layoffs?
Digital media player manufacturer Roku’s quarterly results have been negative since 2022. On Thursday, the company announced it was sacking 10% of its workforce, more than 300 people, which the market greeted with a 6% increase in its share value.
Variety uses the story to provide a list of 75 recent mass layoff announcements, from March 2022 until now, including Amazon’s 37,000 in three batches (November 2022, January 2023 and March 2023) or Meta’s 21,000 in two installments (November 2022 and March 2023), along with many other companies in the industry.
I was looking at the share price performance of a few of these companies, and I found an interesting, but unsettling pattern: it’s not common for the markets to reward layoffs with a share price increase. In some cases, like Meta’s, the layoffs are the signal that helps reverse a clearly downward trend.
The US tech sector is dynamic, but behind all these layoffs there is frustration, personal drama, disappointment, truncated careers and lots and lots of negativity. For the markets to greet all this with “good, now they are doing more with less” or “fantastic, now they are saving a good part of their payroll expenses” seems to me, in addition to being profoundly simplistic, little short of obscene.
