Tesla shares fall on Elon Musk’s workforce cuts

Elon Musk, during an event at SpaceX headquarters in Hawthorne, California, US, on Thursday, October 10, 2019.

Bloomberg / Getty

Tesla stocks fell about 6% on Friday on the news That CEO Elon Musk plans to freeze hiring and cut jobs by 10% at his electric vehicle and renewable energy venture.

Reuters reported late Thursday in an email Musk sent Tesla executives saying he had “extremely bad feelings” about the economy and called for job cuts.

The report follows the news that Musk asked all Tesla and SpaceX employees stop working remotelyand report on site to the main office for a minimum of 40 hours a week.

According to its annual submit financial documentsTesla and its subsidiaries employed 99,290 people around the world as of the end of 2021.

Tesla shares have fallen more than 25% this year amid a widespread sell-off in the tech sector.

Like other automakers, Tesla has faced parts shortages and supply chain problems exacerbated by Covid pandemic and Russia’s Brutal Invasion of Ukraine.

However, Tesla is also trying to recover from the impact of the strict Covid lockdowns in Shanghai, where its factory is located in China, which has significantly hampered production of its vehicles.

On Friday, Cowen equity researchers slashed their second-quarter delivery estimates for Tesla with China impacts. The number of deliveries is the closest approximation to the sales reported by the company.

Cowen CEO and senior research analyst Jeffrey Osborne wrote in a note on Friday, “China is Tesla’s most profitable base, so we see a loss of about 50,000 to 60,000 vehicles as well. This will be exacerbated by the increased challenge in Berlin and Austin for the Model Y.” Tesla’s new factory outside Berlin began production in May.

Cowen also expects Tesla to revise its guidance lower for the year – it aims to increase vehicle sales by 50% by 2022. “We expect Tesla to point to challenges in achieving this.” achieved the stated target of around 50% delivery growth by 2022. We are now prototyping 1.28 million vehicles for the year compared to 1.35 million previously.”

In addition to his interests at Tesla, Musk is also in the process of acquiring Twitter for $54.20 per share, or about $44 billion. As Tesla shares fell, some of Musk’s capital also fell.

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