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One of main points I've seen from people angry about a perceived deliberate manipulation to reduce Gamestop's stock price is that this will directly impact reta
by shuntress 6y ago
One of main points I've seen from people angry about a perceived deliberate manipulation to reduce Gamestop's stock price is that this will directly impact retail workers in the form of job loss.
Could anyone explain how this might happen? My naive assumption is that the relationship between a company and it's stock is (mostly) one-way. If a company cuts jobs, this along with all other signals from that company will be perceived by the market in some way and potentially impact the price of stock in that company. Would the opposite ("Our stock price is going down, lets fire people") be at all likely to happen?
- alfl 6y agoStock prices typically rise after layoffs because the perception is that the company is cutting underperformers that don't have the same marginal contribution as the remaining staff. Generally, a declining stock price could have implications for debt covenants, compensation packages, and, requires selling more stock to finance the same level of capital expenditure.
- dec0dedab0de 6y agoI think that can happen if the board decides to sell the company because the stock is low, then it is bought by another company that just wants to extract as much profit as quickly as possible. For example by taking on a bunch of debt to pay themselves bonsues, then declaring bankruptcy and liquidating the remaining assets. I am far from an expert, but I think something similar happened to Toys R Us.