Shares of BILL Holdings (BILL 3.21%) were gaining last month as the stock benefited from the Federal Reserve's rate-cut announcement. After the company announced a round of layoffs, it committed to controlling costs to raise profits.
As a result, the stock gained 25% last month, according to data from S&P Global Market Intelligence. As you can see from the chart below, the stock gained in steps on a few occasions last month.
Bill prepares to earn more
Bill stock jumped 4% on Dec. 1 to start the month following dovish commentary from Fed Chair Jerome Powell at a conference, which was interpreted as an indication that the Fed could lower interest rates in 2024.
Bill provides back-office payment services to small and medium-sized businesses, and its customers tend to be sensitive to interest rates and the economic cycle. Therefore, lower interest rates would help increase spending on the Bill platform and demand for its services.
The biggest news from the company last month was that it said on Dec. 5 it would cut 15% of its jobs globally and close its office in Sydney, Australia. It also said it would take a restructuring charge of $29 million to $35 million for the move, but it did not give an adjusted-earnings forecast from the job cuts.
Surprisingly, the market's reaction to that news was muted as the stock fell 2% in the following session.
Bill shares surged again the next week after the Fed said it would keep interest rates steady and forecast three interest cuts in 2024, which is good news for Bill and its customers. The stock rose 10% over a two-day period following that announcement.
The stock jumped again on Dec. 19, gaining 8% even though there was no news out on the stock. Shares traded steady for the duration of the month.
What's next for Bill Holdings
The stock has pulled back to begin 2024 in line with a broader market sell-off as investors seem to believe the rally driven by expectations of a soft landing had gotten overheated.
Still, Bill Holdings looks well positioned for 2024 as the stock looks affordable, lower interest rates should help the business, and the company can capitalize on still-elevated interest rates as it collects interest on the money it holds in between payments.
Meanwhile, profits should also get a significant boost following the layoffs it announced last month.
