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by cfors 1394 days ago
Lays off 20% of employees and the stock jumps 9% immediately. Really drives home a good message to all CEO's out there /s
5 comments

Taking your comment in good faith. Snap has a lot of fluff around it that has questionable value (TV Shows, Games). In a recession the investors like to see that fluff gone because it's harder to raise money.

Snap with 20% of its employees gone is more valuable because it focuses on the business that actually makes money instead of hopeful moonshots. You most likely wouldn't see a large uptick in value if this was an industrial "value" company.

Cost centers vs revenue centers
It's common for stocks to rise after layoffs. Investors already know the company is in bad shape, and the layoffs signal things might be changing.

But why in the world is the comment currently being downvoted?

Anyone in tech, working for a non-profitable publicly traded company should be ready for layoffs. This will typically happen after earnings (otherwise you signal there is a problem before your investors know the current state of the company which is bad).

This is clearly the message being sent by this stock price rise. Everyone can pretend it's just a snap specific problem but this is coming to everyone.

edit: to add, if you look at Wayfair stock the day they announced only 5% layoffs, 8/19, their stock dropped considerably. The message from wall street is not "layoffs" but "serious layoffs"

The message is not (necessarily) lay off 20%.

The message can be "we should not have hired so fast"

Or perhaps "take decisive action to respond to market conditions". O

Or any number of other messages.

Layoffs suck but they're done to preserve the value of the overall entity, which includes the benefit of all remaining employees. You cut some jobs but it allows you to keep others.
Its still trading a tiny fraction of what it was a year ago. I dont think anyone would look to SNAP as a good way to run a company.