These days, job cuts are not only news in the media but also frequently happen to us, directly or indirectly. I have recently heard of many friends unfortunately being laid off. My heart goes to them. It does not look like the situation will change soon. Now even the safest and profitable companies are starting to cut jobs, like McDonald's. The thing is, while job cuts are bad for employees, it is often good for the companies. See below an analysis about it:
Netflix (NFLX), Alphabet (GOOG), Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) are all cutting fewer paychecks every two weeks than they did at the start of the year.
And firms that have laid off workers are crushing the market's returns... with the heavily restructured FedEx leading the way.
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It raises a question. Should traders be buying companies whenever they make layoff announcements?
Yet another chart tells that tale...
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The data from some of the biggest-name companies making the biggest layoffs does more than hint at the answer. It suggests that the bigger a layoff round is, the bigger the price spike will be - especially immediately after the news breaks.
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