I’m seeing a lot of companies that had tremendous growth over the past 3 years and at the first sign of “unmet targets” they take drastic measures (I.e. letting go of workforce). While their investors might indeed lose their confidence, sell their shares and, therefore, decrease the overall firm value, companies have made and still have lot of money in the bank, why do they need to care about growth, share price and what investors think to such extreme extents? Wouldn’t it be ok to just go with “we did not grow a single point this year and we have made the exact same profits of last year, that’s really good!”
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Many times, a company’s (current) success is predicated by the assumption of growth in the future. Stock prices are a good example of this. Stock price is high because people expect growth for the company, in the future.
For the last question, it depends a lot also on the market conditions. If every single, for example, mortgage company suffered heavy losses due to some unforeseen reason (like a housing crash), and your company was able to “make exactly same profits as last year”, that’s a good thing. Otherwise, if the company “made exactly same profits as last year” in an otherwise healthy market, then that’s cause for concern. Coz the obvious question would be “if your competitors were able to grow in this market, why couldn’t you?”
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