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Why? The price of the stocks does not affect company in any way. If the company sales are going down or clients stop coming this is an issue, stock value is imp

Why? The price of the stocks does not affect company in any way. If the company sales are going down or clients stop coming this is an issue, stock value is important only for those who hold/speculate using them. You company has already got the money from selling stocks, nobody is going to take them away.

banachtarski 7y ago
Stock prices are leading indicators of future revenue. Not perfect indicators obviously, but the stock prices reflect lower sales/profits/etc due to reduced mobility, supply-chains etc.
tombert 7y ago
Because if the stock price is tanking, there's an incentive to figure out how to either a) increase profits or b) decrease spending. Since the market is tanking, there's a likelihood that people will be spending less, thus leading to less profits for my company; as a result, the only easy way to keep investors happy is to reduce costs, and the easiest way to do that is to start doing layoffs.
- tomatotomato37 7y ago
  That only applies for long-term recession projections where the company is seen as doing a poor job, not now where stock is down because there's a pandemic shutting everything down and market volatility is going batshit. As long as the company has enough cash on hand to ride the pandemic out they'd want to retain everyone so they can ramp up again as fast as possible
  - tombert 7y ago
    Well, isn't there fear that this will lead to another full-on recession? I could be wrong but I thought I read that somewhere. I would very much like to be wrong on this; if I am I don't have to constantly worry about being laid off.
ouid 7y ago
What about all the companies that have been borrowing vast amounts of money at low interest rates to buy back shares?
andreilys 7y ago
“ The price of the stocks does not affect company in any way” RSU value is lower for employees, harder to retain talent, more incentive to fire and cut costs to keep shareholders happy.
- ithkuil 7y ago
  > harder to retain talent, more incentive to fire I struggle to understand how those two things can happen at the same time, to the same company, due to the same cause. I mean, if it's harder to retain talent, presumably this means some people leave the company, leaving the company more dependent on those who stay. Why would they fire them?
  - warkdarrior 7y ago
    Top talent leaves on their own, bottom talent gets fired.
kingludite 7y ago
It seems they only share a name? In some stores people are buying more than ever. But stocks are down?
- dylan604 7y ago
  Products for sell on a shelf now have been in the pipeline for months. The stock market is looking past the immediate now, and is looking at the tomorrow, next week/month. If factories are closed and not manufacturing things, the supply stops. That doesn't affect the retail end today, but will in a few weeks/months.
wuunderbar 7y ago
This sounds nice and sound in a textbook, but the real world with humans doesn't follow.
sangnoir 7y ago
> The price of the stocks does not affect company in any way. That would be the case in the ideal world. However, stockholders care a lot about stock prices being low, and they elect the board, which in turn chooses/advises the CEO (and other executives). When it's the CEO's butt on the line, the company will be reactive to share prices; just to make sure the stockholders are happy. A secondary concern is that low share prices makes a company vulnerable to non-/hostile takeover bids - which again is bad for CEO job security. TL;DR: The tenure of the top echelon (board & executives) of public companies is directly tied to (relative) stock performance due to share voting rights.
briffle 7y ago
Unless you work at a tech unicorn. Remember that uber loses money on every ride, but has grand plans to make it up on volume :)

banachtarski 7y ago

Stock prices are leading indicators of future revenue. Not perfect indicators obviously, but the stock prices reflect lower sales/profits/etc due to reduced mobility, supply-chains etc.

tombert 7y ago

Because if the stock price is tanking, there's an incentive to figure out how to either a) increase profits or b) decrease spending. Since the market is tanking, there's a likelihood that people will be spending less, thus leading to less profits for my company; as a result, the only easy way to keep investors happy is to reduce costs, and the easiest way to do that is to start doing layoffs.

tomatotomato37 7y ago
That only applies for long-term recession projections where the company is seen as doing a poor job, not now where stock is down because there's a pandemic shutting everything down and market volatility is going batshit. As long as the company has enough cash on hand to ride the pandemic out they'd want to retain everyone so they can ramp up again as fast as possible
- tombert 7y ago
  Well, isn't there fear that this will lead to another full-on recession? I could be wrong but I thought I read that somewhere. I would very much like to be wrong on this; if I am I don't have to constantly worry about being laid off.

ouid 7y ago

What about all the companies that have been borrowing vast amounts of money at low interest rates to buy back shares?

andreilys 7y ago

“ The price of the stocks does not affect company in any way” RSU value is lower for employees, harder to retain talent, more incentive to fire and cut costs to keep shareholders happy.

ithkuil 7y ago
> harder to retain talent, more incentive to fire I struggle to understand how those two things can happen at the same time, to the same company, due to the same cause. I mean, if it's harder to retain talent, presumably this means some people leave the company, leaving the company more dependent on those who stay. Why would they fire them?
- warkdarrior 7y ago
  Top talent leaves on their own, bottom talent gets fired.

kingludite 7y ago

It seems they only share a name? In some stores people are buying more than ever. But stocks are down?

dylan604 7y ago
Products for sell on a shelf now have been in the pipeline for months. The stock market is looking past the immediate now, and is looking at the tomorrow, next week/month. If factories are closed and not manufacturing things, the supply stops. That doesn't affect the retail end today, but will in a few weeks/months.

wuunderbar 7y ago

This sounds nice and sound in a textbook, but the real world with humans doesn't follow.

sangnoir 7y ago

> The price of the stocks does not affect company in any way. That would be the case in the ideal world. However, stockholders care a lot about stock prices being low, and they elect the board, which in turn chooses/advises the CEO (and other executives). When it's the CEO's butt on the line, the company will be reactive to share prices; just to make sure the stockholders are happy. A secondary concern is that low share prices makes a company vulnerable to non-/hostile takeover bids - which again is bad for CEO job security. TL;DR: The tenure of the top echelon (board & executives) of public companies is directly tied to (relative) stock performance due to share voting rights.

briffle 7y ago

Unless you work at a tech unicorn. Remember that uber loses money on every ride, but has grand plans to make it up on volume :)