It's still unclear to S&P 500 investors if a recession is on the way. But for workers losing their jobs, the downturn is here now, and investors are paying the price, too.
Shares of the 15 companies with primary U.S.-listed shares that announced layoffs or hiring freezes this year are paying dearly. Shares of these companies, including Tesla, Coinbase Global and Uber Technologies, are down an average 46% this year, says an Investor's Business Daily analysis of market data from S&P Global Market Intelligence and layoff data from Intellizence.
And this is potentially an ominous sign as the labor market continues to weaken. The number of U.S. jobless claims jumped to 229,000 from 202,000 the previous week. Economists polled by Econoday had forecast 210,000.
"We are also watching the services sector PMIs as it drives job growth and is straddling expansion and contraction telegraphing a slowdown in hiring," said Nancy Tengler, CEO of Laffer Tengler Investments.
Big S&P 500 Layoffs
It's not just small startups letting employees go. Big S&P 500 firms are getting in on the pink slip mania, too.
Tesla, the $751 billion juggernaut in electric-vehicle manufacturing, is the most recent example. Earlier in June CEO Elon Musk announced his "super bad feeling" about the future. That came with a warning the company will let go up to 10% of salaried employees (hourly employee headcount may rise however).
Shares of Tesla are down 4% just this month, following the news. During that time, the S&P 500 is down less than 1%. And for the year, Tesla stock is off more than 31%. The S&P 500 in that time is down just 15.4%.
And then there's Uber, the nearly $50 billion ride-sharing and food delivery service in the S&P 500. The company in May announced plans to freeze hiring due to a "seismic shift" in its business. That news definitely left the stock leaner. Shares are down 39.4% just this year.
Epic Wipeouts For Employees And Investors
Nobody wins long term when companies are contracting. That's turned out to be the case in the latest layoff wave.
Look at cryptocurrency wallet firm Coinbase Global. The stock that rode the crypto wave higher is paying mightily as the phenomenon implodes. Shares of the company are down roughly 75% this year. It announced a hiring freeze in June.
Carvana, an online seller of cars, is a similar cautionary tale for investors. Shares dropped a brutal 90% this year. The company announced in May a layoff of 2,500 employees.
Clearly, and unfortunately, this list of layoffs is not complete yet. It's likely to get longer as the economy slows. And that's bad news for their investors, not just the companies' employees.
Layoffs, Job Freezes Painful For Investors, Too
| Company | Symbol | Size of job announcement | Date of announcement | YTD stock % ch. |
|---|---|---|---|---|
| Tesla | 10% | Jun-22 | -32.0% | |
| Coinbase Global | Freeze | Jun-22 | -74.7 | |
| Uber Technologies | Freeze | May-22 | -39.3 | |
| Meta Platforms | Freeze | May-22 | -45.3 | |
| Robinhood Markets | 400 positions | May-22 | -54.8 | |
| Carvana | 2,500 | May-22 | -90.0 | |
| Ford Motor | 580 | Apr-22 | -36.1 | |
| Nektar Therapeutics | 500 | Apr-22 | -74.0 | |
| Bluebird bio | 30% | Apr-22 | -62.7 | |
| Funko | 258 | Apr-22 | 16.5 | |
| Baidu | 15% | Feb-22 | -2.2 | |
| DiDi Global | 3,000 | Feb-22 | -52.6 | |
| Peloton Interactive | 2800 | Feb-22 | -68.9 | |
| Yumanity Therapeutics | 60% | Feb-22 | -40.2 | |
| Spectrum Pharmaceuticals | 30% | Jan-22 | -28.1 | |
| Average of firms with layoffs | -45.6 | |||
| SPDR S&P 500 ETF Trust | -15.5 |
