One odd constant about share prices—or at least as constant as it gets—is that layoffs tend to result in share price gains. Whether it’s the anticipated cost savings or the commitment to success at any cost, layoffs tend to work well. That’s what happened with Barclays (NYSE:BCS), as planned layoffs yielded a fractional upturn in the bank stock‘s share price.
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Barclays plans a layoff that will hit about 5% of its total “client-facing staff” and also planned a complete restructuring of its consumer banking operations. The cuts could begin as soon as next week and are connected to an annual process in which underperforming staff members are cut. Barclays top brass has already been under fire from investors to pare down costs, and with dealmaking on the decline—and thus revenue—reducing headcount is one of the biggest options left.
Barclays isn’t alone here, either; reports note that Goldman Sachs (NYSE:GS) has plans for similar job cuts in late October, and we’ve already seen several rounds of job cutting at Meta Platforms (NASDAQ:META), Morgan Stanley (NYSE:MS), and Citigroup (NYSE:C). For banks and investment operations, the decline of merger and acquisition activity has been particularly troublesome. Reports back in March noted that dealmaking throughout the world had slipped to the lowest levels seen in the last 10 years.
A look at the last five days of trading for Barclays stock shows us a major reason it’s looking so hard into cost cutting. Share prices have been mostly on the decline during this timeframe. While there have been some brief rallies seen on individual days, the general path has been downward.
