Logical and illogical

I understand that a company's stock value usually increases when management decides to downsize. It is likely that the profit will increase as they reduce their costs, assuming they can maintain their existing revenues. Or in the worst case, the company is making a loss and they cut their costs to reduce the loss.

Although if you look at the entire chain, the stock market price should actually fall because fewer people work, which means reduced purchasing power in society in general and logically the company should risk losing revenue.

Since misfortunes never come singly, the risk is high that when one company lays off its staff, other companies will do the same.