This will be a pattern to continue watching, as Goldman predicts a “potential rise” in layoffs given commentary they’ve been hearing during earnings season, which they say is “motivated in part by a desire to use AI to reduce labor costs.” So why have investors changed their tune on restructuring-driven layoffs? The most obvious reason, Goldman’s analysts assert, is that they simply don’t believe what companies are saying. The analysts found that companies that have announced layoffs recently have “experienced higher capex, debt, and interest expense growth and lower profit growth than comparable companies within the same industries this year.” Meaning those staff cuts “might have actually been driven by more concerning reasons like the need to reduce costs to offset rising interest expense and declining profitability.”
It certainly seemed like for a good 2-3 years markets went up on layoff announcements instead of down. And from what Goldman is saying, its analyst aren’t seeing the material returns on the cash flow sheet to reflect the layoffs of the previous 1-3 years.
here’s hoping this manner of managing cashflow crawls back under a rock..
Quote Citation: Lee Clifford, “New Goldman Sachs research shows investors are punishing the stocks of companies that do layoffs | Fortune”, 2025-12-25, https://fortune.com/2025/12/25/goldman-sachs-research-ceos-layoffs-stock-price/