Tesla (TSLA) has started laying off people after CEO Elon Musk recently shared his “super bad feeling” about the economy and called for a 10% workforce reduction at Tesla, according to a Business Insider report. Shares of the electric vehicle (EV) manufacturer rose 5.5% to close at $699 yesterday.
Business Insider noted that they found 11 LinkedIn posts from Tesla’s ex-employees that were asked to leave. Two of the 11 were posted last week, and nine were posted this week.
One of the LinkedIn posts was from Christopher Bousigues, a manager from Tesla Singapore, who was asked to leave as part of the job cut. Another computer-generated imagery (CGI) animation lead was also asked to leave after working for six and a half years at the EV maker. Similar news is visible on LinkedIn from Tesla’s “now” ex-employees across various positions.
Furthermore, according to a Reuters report, Tesla has also canceled three hiring events in China, which were scheduled for later this month. Meanwhile, a key executive from India who was instrumental in undertaking lobbying efforts since 2021 to ease EV imports into the country has also quit because the EV maker halted its plans to sell EVs in India, an Economic Times report stated.
Tesla is not the only American company to take such drastic steps. Warner Bros. Discovery (WBD) also announced yesterday that it will cut up to 30%, or 1,000 ad sales jobs globally, to achieve $3 billion in cost savings. Crypto trading platform Coinbase Global (COIN) also announced an 18% global workforce cut to better manage its expenses.
Similar news of job cuts is adrift from companies of all sectors, including video streaming, E-commerce portals, and technology bigwigs.
Analysts’ View
Elon Musk has a lot on his plate, and analysts are watching his every move and revisiting their models for every tidbit they get. Amongst these is the most awaited outcome of Musk’s Twitter (TWTR) takeover. Investors are weary of the entire saga that has massively affected TSLA’s stock price.
Today, Musk will hold an all-hands meeting with Twitter shareholders. After closely monitoring all the small details of the deal, Wedbush analyst Daniel Ives believes there may be two outcomes. Either Musk renegotiates for a deal less than what he proposed due to the bot issue, or he walks away from the deal and pays the one-billion-dollar break-up fee.
Nonetheless, Ives has a Buy rating on TSLA stock with a price target of $1,000, which implies an increase of 43% to current price levels.
Amid supply chain issues, delays in deliveries, the Shanghai lockdown, and the possibility of missing second quarter targets, the Street has assigned a Moderate Buy consensus rating on the stock based on 16 Buys, eight Holds, and six Sells. The average Tesla price target of $917.10 implies 31.2% upside potential to current levels.
Concluding Thoughts
Yes, the fears of recession are becoming real with the Federal Reserve increasing interest rates by 75 basis points. Companies are taking precautionary measures to fight the inflationary pressures and Tesla is doing the same. Whether these steps culminate in long term success stories will be worth the wait.
Read full Disclosure
