Tesla (NASDAQ:TSLA) declined in trading on Tuesday as investors remained concerned about the EV major’s job cuts announced on Monday. The company announced that it would lay off more than 10% of its global workforce. TSLA stock has been on a downward spiral since the beginning of the year and has dropped by over 10% in just the past five trading sessions.
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Reasons for the TSLA Stock Decline
The EV maker’s stock decline has been worsened by slowing EV sales. In the first quarter, the company produced 433,000 vehicles and delivered approximately 387,000, falling short of analysts’ expectations of 457,000 vehicle deliveries. Additionally, the company is facing increasing competition from domestic players like BYD (OTC:BYDDY) in China, one of the world’s largest EV markets.
Furthermore, Tesla has been on a price reduction spree, providing incentives to buyers, which likely resulted in a decline in its margins. Last week, the company also cut the subscription price of its Full Self-Driving (FSD) system in the U.S. by half. This change in pricing strategy signals a departure from Tesla’s previous approach of maintaining or increasing subscription prices.
Analyst Ives Calls the Layoffs an ‘Ominous Sign’
Five-star-rated analyst Daniel Ives, who has long been bullish on TSLA, described the layoffs as an “ominous signal” indicating tough times ahead for the company. He added that the slowing demand for TSLA’s EVs and a “softer growth outlook” necessitate cost-cutting measures.
Ives is bullish on TSLA. He has given the stock a Buy rating and a price target of $300. The analyst’s price target implies an upside potential of 93.5% from current levels.
Is Tesla a Buy or Sell?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on nine Buys, 19 Holds, and seven Sells. Year-to-date, TSLA has declined by more than 30%, and the average TSLA price target of $196.72 implies an upside potential of 21.8% from current levels.
