Why is the stock up following news of a layoff?
(Honest question, I'm clueless about the financial market)
Seagate Technology to cut about 6,500 jobs; stock jumps 22%
11–18 of 18 posts
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#12Why is the stock up following news of a layoff? (Honest question, I'm clueless about the financial market)
Because it is a cost cutting measure they are assuming that after the layoffs the company will be selling just as much product but will have 6,500 less salaries to pay making them more profitable.
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#13Why is the stock up following news of a layoff? (Honest question, I'm clueless about the financial market)
If the company is having difficulties, which we'd expect with the advent of SSDs as at least in part a disruptive innovation, it can be a sign that management and the board are at least acknowledging the problems. Better than a controlled flight into terrain (https://en.wikipedia.org/wiki/Controlled_flight_into_terrain).
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#14Why is the stock up following news of a layoff? (Honest question, I'm clueless about the financial market)
For the same reason amazon goes down after they reach their profit targets.
Day trading volume is like 70% automatic. Which means it's basically dumb machines fighting dumb machines, and a bunch of speculators trailing the party.
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#15It is possible that like Foxconn, they are depending more on robots for their manufacturing. Perhaps they're preparing themselves to be bought out.
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#16If you want to know more, I suggest checking out this site:
https://www.thelayoff.com/seagate-technology
People at my company had said they don't lay people off. I found otherwise on thelayoff, so I check it periodically to see if there's anything to worry about.
Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#17Re: Seagate Technology to cut about 6,500 jobs; stock jumps 22%
#18Why is the stock up following news of a layoff? (Honest question, I'm clueless about the financial market)
It's all about short-term savings, and a lot of investors think only short-term. The company will have more money because it won't have to pay all those people.
In the long term, this move will probably hurt the company unless all those workers were unskilled assembly line workers. When I hear such news, I seriously consider selling a stock, because that means the company is likely going to be steadily going downhill over the long term.
Sometimes a company in this situation gets it together and does well for itself again. In that case, it's worth buying the stock again. That's by no means certain, so in my opinion a buy and hold strategy isn't worth it for companies that are conducting layoffs due to financial difficulties.