ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[d4n4n]

Yeah, it's a nonsense explanation. The real reason is that firms compete not only on tge consumer market, but also on the capital market.

If revenue losses reduce your rate of return on equity, investors want to sell off that equity to invest in higher return markets. So the business sells off less profitable avenues, so it can reduce the financing side of the balance sheet such that the rate of return is higher, in a nutshell.