But to have an axe constantly dangling over your head is no way to live. If you are competent, better to choose a more dignified existence along with high pay. And with Netflix stock down 72% in 6 months, the choice becomes even easier.

> But to have an axe constantly dangling over your head is no way to live. If you are competent, better to choose a more dignified existence

And yet, you often hear of Google's rest and vest culture and how bored people are in that environment. Some people might prefer an all-around high achiever culture, at certain points in their careers.

> And with Netflix stock down 72% in 6 months

Given Netflix's compensation structure (all cash) this is irrelevant unless you believe the market valuation indicates the company is doomed in the short term.

Market value fluctuations aren't the same thing as profit or even revenue. A company doesn't suddenly lose money and have to lay people off due to others trading its stock for less money. And they don't get rich when the stock price goes up, either. Unless they sell more shares in a secondary public offering or similar, their cash flows stay the same.

The effect is much more subtle and it has more of an impact on companies where equity is a big part of employee compensation.

Market value and revenue/profit are not the same thing but they are very related.

Netflix's market value falling 72% means the market has a negative view of Netflix's foreseeable ability to sustain or grow revenues and profits.

You are right in that it is possible that Netflix has the market fooled and in reality is growing its revenues and profits and cash flows at an even greater rate than expected and it is all just one big misunderstanding.

If that is the case, Netflix can always choose to 'go private', where it no longer sees a need for public market funding and believes that savvy private investors combined with its revenues and cash flows can fund its operations and growth.

But as a public company, its stock price and market value also signify access to capital. The less capital Netflix has access to, the less it can invest in its existing and growth operations, like the 100s of shows it creates every year.

With access to less capital, Netflix will keep on fewer of its 'dream team athlete' workers, even with their all cash and no stock compensation, which is why we are starting to see layoffs.

Stock prices are mostly tied to reality in the long run, but barely at all in the short run.

That is true, but "Markets can stay irrational longer than you can stay solvent".

If their stock price keeps tanking, layoffs are inevitable. This is sadly true for much of the economy if it goes into recession.

Variable stock compensation for engineers does have the benefit that it fluctuates with investor perceptions of company performance. In theory investors may not care about compensation in a flat/growth stock, but seeing a 10% decline in personnel expenses on a stock down 25% is definitely appealing to investors.

If you’re “living in a position of f%%% you” (https://m.youtube.com/watch?v=xdfeXqHFmPI) which you should be in a couple of years making a Netflix salary, a layoff is just an inconvenience. Heck how many software engineers at any of the top tech companies have trouble finding a job quickly?

Agreed. Being laid off after a couple of years at 500k/yr is better than grinding it out for a decade at 100k/yr. And you can always choose the grind after the layoff.