Tesla job cuts heighten Wall Street concerns that EV maker faces a demand problem
Companies often see their stock price jump after announcing job cuts, as Wall Street rallies around the prospects for improved efficiency and profits.
Companies often see their stock price jump after announcing job cuts, as Wall Street rallies around the prospects for improved efficiency and profits.
But that’s not how investors treated the latest news out of Tesla. Shares of the electric vehicle maker tumbled almost 6%, falling to their lowest since May of last year, after CEO Elon Musk told employees the company is eliminating more than 10% of its global workforce.
“There is nothing I hate more, but it must be done,” Musk wrote in a memo about the layoffs.
Tesla shares have been spiraling since the calendar turned, tumbling 29% in the first quarter, the worst period since late 2022 and the third-steepest drop since the company’s initial public offering in 2010. The stock is 60% below its peak reached in November 2021.
Previous layoffs haven’t drawn such market pessimism. In 2018, when Tesla cut 9% of headcount, shares rose more than 3%. In 2022, the stock plunged 9% on initial reports around layoffs but recovered after Musk made clarifying comments days later.
Rating: 5