Although it’s an uncomfortable topic, job cuts – when performed correctly – could lead to greater efficiencies, which is why investors may want to target certain stocks to buy after layoffs. Again, I apologize ahead of time for the macabre nature of the discussion. Layoffs stink. I would know.
At the same time, I can’t avoid the reality that for the other side of the equation, market participants may enjoy potentially significant upside opportunities. Basically, the pink slips allow companies to refocus, hopefully sparking a return to growth and profitability. Therefore, as terrible as it sounds, companies to invest in after layoffs should be on your radar.
Finally, you can’t let emotions paralyze your judgment. If the tables were flipped, other folks would probably think nothing of profiteering off your job loss. On that note, below are post-layoff stock buys to consider.
Meta Platforms (META)
A social media and internet technology juggernaut, Meta Platforms (NASDAQ:META) proves that even the biggest enterprises are not immune to broader economic pressures. According to a CNBC report late last month, Meta initiated its latest (third) round of layoffs in a bid to save costs. The article goes onto state that about 10,000 workers will lose their jobs between the April (second round) and May cuts.
In the first round in Nov. last year, the pink slips affected 11,000 employees. On paper, it’s all part of Meta’s so-called year of efficiency. Earlier Meta CEO Mark Zuckerberg stressed the importance of slimming down and becoming more nimble against the backdrop of a weakened digital advertising market. Fundamentally, these cuts make META one of the stocks to buy after layoffs.
Mainly, Meta still enjoys enormous relevancies through its Facebook social network, which provides both personal and professional services. Also, while its metaverse push attracts controversy, Meta’s innovations in virtual reality hardware should prove extremely relevant. Thus, it’s one of the companies to invest in after layoffs.
These days, entertainment stalwart Disney (NYSE:DIS) generates arguably the most attention for its political feud with Florida Governor Ron DeSantis. Given the escalating temperature of that fiasco, implying that DIS represents one of the stocks to buy after layoffs might seem tame. Nevertheless, it’s a controversial issue that has clouded the broader narrative.
Late last month, CNN reported that Disney began its third round of expected headcount reductions. This time around, the company cut more than 2,500 jobs. According to the news agency, the first two waves of layoffs occurred in March and April, which eliminating about 4,000 jobs. The workforce reduction impacted ESPN, Disney Parks and the company’s Experiences and Product division. Still, the implied subsequent efficiencies should make DIS one of post-layoff stock buys.
For one thing, the pink slips may have helped Disney weed out the employees that didn’t want to be there. Second, the company can start rebranding itself to delivering content that people want to see, which could be a profitable pivot. Therefore, it’s one of the layoff recovery stocks.
If you want to invest in companies after layoffs, there are many more promising entities to consider than BuzzFeed (NASDAQ:BZFD). With its shares priced at 66 cents, BZFD stands a real danger of a delisting from the Nasdaq exchange. Of course, that would likely be quite devastating for visibility in terms of attracting retail speculators. Nevertheless, for the extreme gambler, BZFD could be one of the stocks to buy after layoffs.
In the back half of April, BuzzFeed announced that it would lay off 15% of its workforce. In part, management cited digital ad headwinds, which represents a familiar challenge in the broader internet content space. To be sure, the headcount reduction represented a serious slap in the face because it effectively shut down BuzzFeed News. This business segment won a Pulitzer Prize
However, the internet audience might not really care about straight journalism at this present juncture. Therefore, the layoffs may allow the company to rebrand and focus heavily on what actually works, whatever that might be.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.