Innodata's stock plummeted amid sudden layoffs. What risks might investors face?

Innodata, a company that trains third-party AI models, saw its stock price plummet by more than a quarter on the Nasdaq on October 27. The Indian publication India Today reported massive and sudden layoffs of the company’s employees in India and the Philippines, attributing them to a reduction in work on one of its projects. This could jeopardize the company’s ability to meet its 2027 targets.

Innodata's stock plummeted by more than 25% on October 27, falling to $44.7. This is the lowest closing price since early May.

Stock prices plummeted after India Today reported that the company had laid off more than 500 employees in India and even more in the Philippines. The layoffs affected more than 5% of Innodata’s workforce, according to Motley Fool contributing analyst Anders Billund.

It all happened quickly: employees lost access to their work accounts in the middle of their shifts, and termination notices were sent to their personal email addresses because they did not have access to Innodata’s systems, according to India Today. Some employees were told this was due to a reduction in services for a major client, the article states.

Investors quickly did the math and realized that fewer active projects mean lower revenue and profits, Billund writes. This is unforgivable for a company whose shares are trading at an inflated price—even after the correction on October 27, Innodata’s valuation was 27 times its projected earnings, the analyst notes.

Innodata’s two largest clients accounted for 71% of its revenue in the second quarter of 2026; a reduction in work on one of its major projects could jeopardize the growth forecast for 2027, according to the TIKR portal. The company itself has not disclosed the names of its largest clients; its website lists Google, Microsoft, Amazon, Apple, Sony, Hewlett-Packard, Snowflake, Boeing, and Deloitte among its partners. In addition, Innodata was likely among those responsible for training the personal AI agent Muse for Meta, the owner of Facebook and Instagram, according to Hunterbrook Media.

India Today describes the last workday for more than 550 Innodata employees in India as follows. Monday, October 26, began as usual for them: they logged into the corporate system and clocked in. They suspected that “something was wrong” when the team in the Philippines was fired during a Zoom video call.

After that, some employees in India checked the company’s HR portal and found their pay stubs there. “We panicked and contacted our managers, who were also shocked by the news,” one of the employees told the publication.

While he and his colleagues were trying to figure out what was happening, “one by one, we began to lose access to our work devices; our laptop sessions were terminated, and our work accounts were deactivated.”

It wasn't until several hours later that people began receiving emails from the human resources department in their personal email accounts, informing them that their employment had been terminated due to operational necessity, according to the article.

The publication notes that it has only indirect information regarding the number of employees who were laid off. Innodata itself has not commented on the report.