Amazon's biggest layoffs in history! Why did its stock price rise instead of falling?

Just a few days into the year of 2024, Amazon CEO Andy personally came out to issue an announcement . This announcement was extraordinary, directly announcing the largest round of layoffs in Amazon's history, affecting more than 18,000 people!

After Amazon announced its first-quarter losses last year, it has been carrying out multiple rounds of contraction, including cutting the number of warehouses and employees. Obviously, several rounds of layoffs last year did not meet Amazon's expectations, so at the beginning of this year, it arranged such a "largest layoff in history". And Andy also mentioned in the announcement that there will be more personnel changes in 2023.

However, with the news of large-scale layoffs, Amazon's stock price did not fall sharply but instead began to stabilize , stopping the four-month consecutive decline.

Many friends don't understand this. Don't layoffs represent negative news? Why don't stock prices plummet? Here I want to tell you that the stock price itself reflects the market's expectation of the company's future profitability . If there are no major problems with the company's main business, the cost reduction and efficiency improvement brought about by layoffs will greatly enhance the company's profitability. This is why the stock prices of many large Internet companies have gradually recovered after large-scale layoffs.

Take iQiyi as an example. In December 21, iQiyi launched the largest-scale layoffs, laying off more than 2,000 people, accounting for more than 25% of the total number of employees. Subsequently, the net profit in 2022 increased significantly. Although it was negative, the loss was obviously much less.

Therefore, Amazon's multiple rounds of layoffs are definitely more beneficial to itself. The platform can reduce operating costs and be less aggressive in exploiting us sellers.

Andy mentioned that the affected employees will be notified starting from the 18th. Some employees have already received the redundancy package. After reading it, I just want to say

According to the information I have collected, Amazon's layoff subsidies are quite generous. Starting from the day after the employee receives the dismissal notice from HR or the manager, Amazon employees have 60 days to find a job. They can look for jobs outside or apply for other positions within Amazon. During these 60 days, they will receive full salary! Two months of paid leave is available directly!

Employees who have not been offered an internal position after 60 days will be formally dismissed. They will receive severance pay according to their years of service, two weeks of weekly pay for every full year, with a minimum of four weeks. For example, if you have worked at Amazon for five years, you will be given 10 weeks of weekly pay plus 60 days of paid leave. According to the domestic calculation method, you will receive about 4.5 months of compensation. How does this level of compensation compare with that of domestic Internet giants?

JD.com, an Internet giant that competes with Amazon, also began to lay off employees last year. Moreover, Internet giants now call layoffs “graduation” instead of layoffs. Alibaba even called its layoffs “exporting talents to society”.

Last year, many Internet giants, including JD.com, Alibaba and ByteDance, experienced massive layoffs. Even just a few days into this year, ByteDance reported that its HR was beaten by angry employees because of layoffs.

It was rumored online that ByteDance did not want to give out year-end bonuses, so it fired employees a little before the year-end bonus assessment, leaving a large amount of money, which might offset the compensation, so it could just fire them without spending any money. As a result, many employees felt that they had worked for a whole year until 7 or 8 a.m. every night but did not receive a year-end bonus, so they got into physical conflicts with HR, and both sides pulled each other's hair and beat each other in the company. ByteDance later refuted the rumor, saying that there was no fighting in the company, but everyone can just wait and see.

I did some statistics and found that the dismissal compensation of Internet giants is generally N+1, which means compensation for "years of service" + 1 month's monthly salary. If you have worked for 5 years, you will be compensated for 6 months' monthly salary. A small number of people can get N+2. Alibaba and ByteDance also provide additional compensation for the next month's social security payment.

By comparison, if you have worked for a long time, the compensation plan of domestic companies is definitely more cost-effective. If you have only worked for one or two years, Amazon's compensation plan is more cost-effective. Combined with the fact that most of the people fired by Amazon are front-line warehouse and transportation workers who generally did not work for long, it seems that my brother-in-law is still quite conscientious.

Apart from the wealthy domestic Internet giants, there are relatively few cross-border companies that can fully implement the N+1 compensation for dismissal. Moreover, even many well-known cross-border companies have been exposed for layoffs, such as " forcing employees to be on standby without working and only paying the local minimum wage, and forcing employees to sign voluntary resignation."