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What “unprofitable” companies are you talking about? Most of the layoffs have come from very profitable companies that trimmed a lot of fat they acquired. Meta

What “unprofitable” companies are you talking about? Most of the layoffs have come from very profitable companies that trimmed a lot of fat they acquired. Meta, Amazon, Stripe, Twilio, Salesforce etc are all profitable companies. That’s where the majority of non crypto layoffs came from.

adventured 4y ago
While you're correct about most of those, Twilio has been an epic loss-making machine its entire existence. $1.1 billion operating loss the past four quarters on a mere $3.6b in sales. $915m operating loss fiscal 2021, $492m operating loss 2020, $369m operating loss 2019, $108m operating loss (on $650m in sales) for 2018, and so on. They have always lost money and are currently gushing red ink. It's definitely part of the reason their stock has collapsed in such a dramatic way (a particularly unsupported valuation previously). While even most highly profitable tech stocks have dropped by a lot, Twilio's drop of ~89% is largely reserved for the group of very unprofitable extreme valuation tech stocks.
ptero 4y ago
Profitable big tech layoffs are, in my opinion, a different phenomenon. Those companies are trying to get their PE up to be competitive with fixed rate assets. Otherwise, their share prices will suffer even more. For example, Google's PE of 19 is OK in the era of a free money, but not so good when rates are at 5% and defensive sectors yield 7+%. But the key thing is that the layoffs are not an existential question for them -- they are profitable and can continue to run for years even if their shares suffer. It would be a bad business decision, but will not lead to a quick death. I was talking about smaller, unprofitable, non-market dominating firms. If they are not profitable they will have to raise or die. And raising in the environment of 5+% rates and poor overall tech stock performance may get brutal. Currently, many of those companies still have significant runways (because they were able to raise a lot earlier), but this will start running out in the next several months. This may already be starting: two of my friends who work in such small companies (robotics and lasers) are sensing job uncertainty ahead. My 2c.
- TheCoelacanth 4y ago
  It's not an existential question for the companies, but it could be for the people making the decisions. If shareholders aren't happy with the company's performance, the CEO might find themselves getting replaced.
ketzo 4y ago
Isn't that exactly the parent's point? They are saying that many unprofitable companies haven't done their layoffs yet, because they're still coasting on huge funding rounds from 2021. Thus, there are more axes yet to fall. Not sure how much stock I actually put in that argument -- lots of VC-funded companies are already doing layoffs, too -- but I think you're sort of agreeing with them.
- VirusNewbie 4y ago
  If a company isn’t doing layoffs now, when there is basically a free pass PR wise, they must be extremely over confident or delusional.
  - ketzo 4y ago
    Not that you’re wrong, but aren’t you kinda describing the archetypal VC-funded startup founder? :D
  - whatshisface 4y ago
    If you're describing it as a PR pass they don't have one.
meltyness 4y ago
Profitable, but not consumer facing, advertising driven revenues may be volatile, depending on how sophisticated a thief the company is.
mrtksn 4y ago
Here is graph visualising the layoffs: https://www.visualcapitalist.com/visualizing-tech-company-layoffs-in-2022/ https://www.visualcapitalist.com/visualizing-tech-company-la... November appears to be the exception where those profitable big company layoffs dominate but it's still not by much. The long tail is the king, as always.
- VirusNewbie 4y ago
  The graphs aren’t very accurate. Reports 8k twitter layoffs???
  - ojbyrne 4y ago
    The source (https://www.trueup.io/layoffs https://www.trueup.io/layoffs) says 3750 FTE and 4400 Contractors were laid off. Which looking around the web seems accurate.
aadvark69 4y ago
Twilio is NOT profitable
trustfundbaby 4y ago
Carvana, Vroom, Bird, Helbiz, FuboTv, Shift, Wework, 23andMe to name a few, theres many more. Their stocks are either in or dangerously close to penny stock category.

adventured 4y ago

While you're correct about most of those, Twilio has been an epic loss-making machine its entire existence. $1.1 billion operating loss the past four quarters on a mere $3.6b in sales. $915m operating loss fiscal 2021, $492m operating loss 2020, $369m operating loss 2019, $108m operating loss (on $650m in sales) for 2018, and so on. They have always lost money and are currently gushing red ink. It's definitely part of the reason their stock has collapsed in such a dramatic way (a particularly unsupported valuation previously). While even most highly profitable tech stocks have dropped by a lot, Twilio's drop of ~89% is largely reserved for the group of very unprofitable extreme valuation tech stocks.

ptero 4y ago

Profitable big tech layoffs are, in my opinion, a different phenomenon. Those companies are trying to get their PE up to be competitive with fixed rate assets. Otherwise, their share prices will suffer even more. For example, Google's PE of 19 is OK in the era of a free money, but not so good when rates are at 5% and defensive sectors yield 7+%. But the key thing is that the layoffs are not an existential question for them -- they are profitable and can continue to run for years even if their shares suffer. It would be a bad business decision, but will not lead to a quick death. I was talking about smaller, unprofitable, non-market dominating firms. If they are not profitable they will have to raise or die. And raising in the environment of 5+% rates and poor overall tech stock performance may get brutal. Currently, many of those companies still have significant runways (because they were able to raise a lot earlier), but this will start running out in the next several months. This may already be starting: two of my friends who work in such small companies (robotics and lasers) are sensing job uncertainty ahead. My 2c.

TheCoelacanth 4y ago
It's not an existential question for the companies, but it could be for the people making the decisions. If shareholders aren't happy with the company's performance, the CEO might find themselves getting replaced.

ketzo 4y ago

Isn't that exactly the parent's point? They are saying that many unprofitable companies haven't done their layoffs yet, because they're still coasting on huge funding rounds from 2021. Thus, there are more axes yet to fall. Not sure how much stock I actually put in that argument -- lots of VC-funded companies are already doing layoffs, too -- but I think you're sort of agreeing with them.

VirusNewbie 4y ago
If a company isn’t doing layoffs now, when there is basically a free pass PR wise, they must be extremely over confident or delusional.
- ketzo 4y ago
  Not that you’re wrong, but aren’t you kinda describing the archetypal VC-funded startup founder? :D
- whatshisface 4y ago
  If you're describing it as a PR pass they don't have one.

meltyness 4y ago

Profitable, but not consumer facing, advertising driven revenues may be volatile, depending on how sophisticated a thief the company is.

mrtksn 4y ago

Here is graph visualising the layoffs: https://www.visualcapitalist.com/visualizing-tech-company-layoffs-in-2022/ https://www.visualcapitalist.com/visualizing-tech-company-la... November appears to be the exception where those profitable big company layoffs dominate but it's still not by much. The long tail is the king, as always.

VirusNewbie 4y ago
The graphs aren’t very accurate. Reports 8k twitter layoffs???
- ojbyrne 4y ago
  The source (https://www.trueup.io/layoffs https://www.trueup.io/layoffs) says 3750 FTE and 4400 Contractors were laid off. Which looking around the web seems accurate.

aadvark69 4y ago

Twilio is NOT profitable

trustfundbaby 4y ago

Carvana, Vroom, Bird, Helbiz, FuboTv, Shift, Wework, 23andMe to name a few, theres many more. Their stocks are either in or dangerously close to penny stock category.