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Can you explain how your job is directly related to the company's stock trading price? Not being sarcastic are something, just genuinely curious?

quickthrowman 7y ago
Stock prices are an expectation of future cash flows, the rest explains itself.
- droopyEyelids 7y ago
  There is a bit more to be said about how wall st places more value on layoffs than other adjustments to a company's balance sheet. Employees are seen as a generally ugly long term money sink.
  - quickthrowman 7y ago
    I agree wholeheartedly, investors really dislike raises and bonuses for line employees, and will punish companies for it. Shareholder primacy theory is insanity. Speaking of insanity, Art Laffer is advising the current administration re: stimulus. How that guy isn’t immediately laughed out of any room he walks into is beyond me.
wcoenen 7y ago
The stock price is determined by dicounted cash flow valuation of profit, or at least what stock traders estimate it to be. If the stock price is crashing, that means traders are predicting reduced profits. Reduced profits mean layoffs.
- AndrewUnmuted 7y ago
  The stock could also be crashing because the perceived value of the asset was distorted by market conditions, and the stock index corrections have now produced a far more realistic and scary environment in which value is better understood.
pbourke 7y ago
> Can you explain how your job is directly related to the company's stock trading price? Not being sarcastic are something, just genuinely curious? It’s indirectly related through the executives who make decisions that are primarily motivated by the stock price.
carolus4 7y ago
situation is something like: Stock price going down means market expects less profit Directors who can react to this change and minimise loss or find opportunities, should. This can be increasing revenue (assuming that's tough, otherwise the stock price wouldnt be tanking), or reducing cost (some development work created, a lot of other work lost, including dev / management)
tombert 7y ago
I mean, I don't know that it should, but my understanding is that when the stock price dips, and investors start wanting a return for their investment, executives look for quick ways to decrease spending, thus increasing profit (at least in the short term). One of the easiest thing to do to lower spending is to cut some workers and push their work onto the remaining workers. It's not an ideal situation for anyone, except maybe the executives.
wonderwonder 7y ago
All jobs at a publicly traded company are related to stock price. When a company goes public its primary duty is to the stockholders. So in times of hardship it has to reduce cost to increase income / stock price. The primary way of doing this is layoffs.
eldavido 7y ago
Two important points worth making here. First, huge stock market panics are fear-driven. Partly they're responses to fear, partly they create more of it. When fear sets in, people get nervous. First-order, that means more concern about protection, downside risk, and survival. In business, that means, how much cash is in the bank? Can we pay our bills to employees/landlords/utilities? Since it's harder to wiggle out from long-term contractual commitments (debt service, leases), employees are often but not always the first to go, simply because they CAN be let go. Not ideal, but it happens. Additionally, hiring slows and since some level of frictional unemployment (google it) is bound to exist, those people won't be as easily re-absorbed into new jobs. Second point: executives, salespeople, and others "at the edges" are driven by market forces. Interior decision-making, especially at large businesses and far from top management, isn't driven by external market forces to any real extent. A better model I just read in the economist explained it as companies being little miniature command economies (dictatorships), mediated by market forces in their interactions with the outside world. A few examples that come to mind: (a) wages aren't typically adjusted internally when salaries rise externally, (b) most funding decisions are made by management, not external banks/stock market. So probably wise to assume, unless sufficient evidence to the contrary, that mid-level decision making in companies won't be market-driven, it will be done by (potentially more efficient) command mechanisms. A manager tells you to do something and you do it, there isn't some auction mechanism held where people bid on tasks. We do it that way because it's more efficient. EDIT: The article in question (very good IMO, talks about how uber is creating a semi-centrally planned, non-market driven ride economy: https://www.economist.com/christmas-specials/2019/12/18/can-technology-plan-economies-and-destroy-democracy https://www.economist.com/christmas-specials/2019/12/18/can-...)
ksec 7y ago
I guess it is a matter of perception. That is what many Americans companies would do, stock price is everything. In the UK and EU people doesn't get fired/ layoffs/ or even switching jobs as often.

quickthrowman 7y ago

Stock prices are an expectation of future cash flows, the rest explains itself.

droopyEyelids 7y ago
There is a bit more to be said about how wall st places more value on layoffs than other adjustments to a company's balance sheet. Employees are seen as a generally ugly long term money sink.
- quickthrowman 7y ago
  I agree wholeheartedly, investors really dislike raises and bonuses for line employees, and will punish companies for it. Shareholder primacy theory is insanity. Speaking of insanity, Art Laffer is advising the current administration re: stimulus. How that guy isn’t immediately laughed out of any room he walks into is beyond me.

wcoenen 7y ago

The stock price is determined by dicounted cash flow valuation of profit, or at least what stock traders estimate it to be. If the stock price is crashing, that means traders are predicting reduced profits. Reduced profits mean layoffs.

AndrewUnmuted 7y ago
The stock could also be crashing because the perceived value of the asset was distorted by market conditions, and the stock index corrections have now produced a far more realistic and scary environment in which value is better understood.

pbourke 7y ago

> Can you explain how your job is directly related to the company's stock trading price? Not being sarcastic are something, just genuinely curious? It’s indirectly related through the executives who make decisions that are primarily motivated by the stock price.

carolus4 7y ago

situation is something like: Stock price going down means market expects less profit Directors who can react to this change and minimise loss or find opportunities, should. This can be increasing revenue (assuming that's tough, otherwise the stock price wouldnt be tanking), or reducing cost (some development work created, a lot of other work lost, including dev / management)

tombert 7y ago

I mean, I don't know that it should, but my understanding is that when the stock price dips, and investors start wanting a return for their investment, executives look for quick ways to decrease spending, thus increasing profit (at least in the short term). One of the easiest thing to do to lower spending is to cut some workers and push their work onto the remaining workers. It's not an ideal situation for anyone, except maybe the executives.

wonderwonder 7y ago

All jobs at a publicly traded company are related to stock price. When a company goes public its primary duty is to the stockholders. So in times of hardship it has to reduce cost to increase income / stock price. The primary way of doing this is layoffs.

eldavido 7y ago

Two important points worth making here. First, huge stock market panics are fear-driven. Partly they're responses to fear, partly they create more of it. When fear sets in, people get nervous. First-order, that means more concern about protection, downside risk, and survival. In business, that means, how much cash is in the bank? Can we pay our bills to employees/landlords/utilities? Since it's harder to wiggle out from long-term contractual commitments (debt service, leases), employees are often but not always the first to go, simply because they CAN be let go. Not ideal, but it happens. Additionally, hiring slows and since some level of frictional unemployment (google it) is bound to exist, those people won't be as easily re-absorbed into new jobs. Second point: executives, salespeople, and others "at the edges" are driven by market forces. Interior decision-making, especially at large businesses and far from top management, isn't driven by external market forces to any real extent. A better model I just read in the economist explained it as companies being little miniature command economies (dictatorships), mediated by market forces in their interactions with the outside world. A few examples that come to mind: (a) wages aren't typically adjusted internally when salaries rise externally, (b) most funding decisions are made by management, not external banks/stock market. So probably wise to assume, unless sufficient evidence to the contrary, that mid-level decision making in companies won't be market-driven, it will be done by (potentially more efficient) command mechanisms. A manager tells you to do something and you do it, there isn't some auction mechanism held where people bid on tasks. We do it that way because it's more efficient. EDIT: The article in question (very good IMO, talks about how uber is creating a semi-centrally planned, non-market driven ride economy: https://www.economist.com/christmas-specials/2019/12/18/can-technology-plan-economies-and-destroy-democracy https://www.economist.com/christmas-specials/2019/12/18/can-...)

ksec 7y ago

I guess it is a matter of perception. That is what many Americans companies would do, stock price is everything. In the UK and EU people doesn't get fired/ layoffs/ or even switching jobs as often.