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> avoid overspending relative to revenues. Most companies are already making a shit ton of money. Firing people won't keep their stock prices from going down i
by curiousgal 4y ago
> avoid overspending relative to revenues.
Most companies are already making a shit ton of money. Firing people won't keep their stock prices from going down if a recession actually hits. It's moot.
- disgruntledphd2 4y agoLyft are not one of those companies though.
- vineyardmike 4y agoThey could run out of money of course. It’s about the cash flow. When rates were low a lot of companies used debt to acquire cash, use it to hire/spend beyond their current means in order to expand their business (more revenue later). This is pretty common, use debt to build a warehouse/data center/app widget/etc. In a recession, that extra revenue may not come, so they need to cut spending so spending < revenue instead. Especially a company like Lyft that is likely losing money many months. I don’t know about today, but Uber and Lyft were famous for using venture capital to spend more than they took in every month. Eventually they run out of cash reserves, or they decide they can’t acquire more.
- ShivShankaran 4y agothey are also a lot in debt. Almost everyone of them borrowed with corporate bonds in the last 6 months on a very low interest rates.
- s1artibartfast 4y agoHow far the stock goes down will depend on profitability. Would you rather own a more or less profitable company?