There’s been a wave of high-profile layoffs lately—Hasbro cut 1,900 jobs, Visa laid off 1,400, New York Community Bancorp let go of 700, and Ford slashed 3,920 positions across Europe. These moves aren’t just headlines—they’re trading signals.
‍

When established companies with real profits announce layoffs, it’s usually bullish. Why? Because layoffs are viewed as earnings per share boosts. Cutting costs means higher profits per share, which often leads to a higher stock price. The bigger the layoff, the bigger the boost.
‍

Layoffs are also a normal part of how companies manage their costs. Instead of firing individuals—risking lawsuits—companies “restructure” whole teams or divisions. That’s what makes it clean, legal, and effective.
‍

Sometimes, activist investors push for layoffs to force management to get lean. That’s what happened with Salesforce. Investors came in, pushed for cuts and buybacks, and the stock jumped 60%.
‍

And when layoffs aren’t a sign the business model is broken, they’re one of the fastest ways to drive profit. The impact can hit the bottom line immediately.
‍

Here’s an example. A company with 100,000 workers and an EPS of $8 announces a 20% layoff. If the average worker costs $200,000 a year, laying off 20,000 workers saves $4 billion. If the company has a billion shares, that’s a $4.00 increase in earnings per share—a 50% jump in value.
‍

This is exactly why Meta’s stock doubled after a series of layoffs. The market went from seeing a bloated company to a profitable, focused one.
‍

But be careful. When unprofitable companies lay off workers—like startups or firms with unstable business models—it’s often a red flag. Investors might see it as the company struggling to survive, and the stock price can fall.
‍

How to trade it.
‍

The average move depends on the company’s fundamentals. Stocks of profitable companies often rise immediately after layoff news—sometimes in after-hours trading—then pull back before climbing again over several days. That opens up different strategies:
‍

For short-term traders: Look for call option opportunities or intraday trades following bullish layoff news.
‍

For swing traders: Wait for the initial pop and pullback, then enter once support levels hold or the trend resumes upward.
‍

For longer-term investors: Layoffs at profitable companies can mark the start of a multi-month turnaround. Meta and Salesforce are examples.
‍

Using filters in the Layoffs scenario, you can quickly compare historical stock reactions by company type, size of layoff, and profitability—so you’re not guessing, you’re trading with data.

‍

Watch the video here:

‍

Frequently Asked Questions About Layoffs

‍

Do stocks go up or down with layoffs?

‍
It depends on the company’s financial health and market perception. For profitable companies, layoffs are often seen as cost-cutting measures that increase earnings per share—leading to a rise in stock price. For struggling companies, layoffs may signal deeper issues, which can drive the stock down.

‍

What happens to my stock options if I get laid off?

‍
Stock options may expire depending on your company’s policy. Some companies give a grace period to exercise vested options after termination, while unvested options are typically forfeited. Always check your employment agreement and equity plan for details.

‍

Are layoffs bad for a company?

‍
Not necessarily. While layoffs can hurt morale and productivity in the short term, they’re sometimes used to streamline operations, improve efficiency, and realign strategy. However, excessive or repeated layoffs may harm a company’s long-term reputation and employee trust.

‍

What happens to my stocks if I get laid off?

‍
If you own shares (not options) outright, they’re yours to keep regardless of employment status. However, your ability to buy more shares through an employee stock purchase plan (ESPP) or other benefits may end once you leave.

‍

Why do companies do layoffs instead of firing?

‍
Layoffs are often done for financial or structural reasons and are not tied to performance. They also help reduce legal risk. Firing individuals can expose a company to lawsuits, but laying off entire departments during a restructuring is usually safer and more defensible.

‍

‍