Microsoft (MSFT) stock rebounds despite layoff storm... Why?

▲ Microsoft (MSFT)/AI generated image

Microsoft (MSFT) announced plans to cut over 3,000 jobs in its Xbox division, yet its stock price rose in after-hours trading. As Game Pass growth slowed and cost-cutting pressures mounted simultaneously, investors are primarily factoring in the effects of the restructuring.

According to social investment platform Stocktwits on July 7 (local time), Microsoft's stock price rose 0.44% to $388.43 in after-hours trading. The previous closing price was $386.74. The market capitalization was recorded at $2.9 trillion.

According to the Wall Street Journal, Microsoft plans to lay off approximately 3,200 employees in its Xbox division. The layoffs will proceed with 1,600 immediate cuts and an additional 1,250 during the fiscal year. The company also intends to sell or spin off four game development studios.

Xbox CEO Asha Sharma cited poor performance in the gaming business as the reason for the restructuring. Game Pass subscribers reportedly stood at around 30 million, significantly falling short of the internal target of 77 million. Xbox division revenue decreased by 5% year-over-year, and profit margins also declined.

As of June 2025, Microsoft employed 228,000 full-time staff. These layoffs are part of a larger restructuring of approximately 4,800 employees, representing about 2% of the total workforce. In the Xbox division, approximately 20% of the total workforce will be affected.

According to Stocktwits, retail investor sentiment remained bullish. Among 56 Wall Street analysts surveyed by Koyfin, 53 recommended "Buy" or higher for Microsoft. The average price target was $561.11, reflecting an upside potential of approximately 50% from the previous closing price.

[Key Article Summary]

-Microsoft's stock price rose 0.44% in after-hours trading despite news of over 3,000 job cuts in the Xbox division.

-Game Pass subscribers reportedly reached 30 million, significantly below the internal target of 77 million.

-53 out of 56 Wall Street analysts maintained a "Buy" or higher rating for Microsoft.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*