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Elon Musk, CEO of Tesla Inc. (NASDAQ:TSLA), is being called upon to clarify the circumstances surrounding the recent layoffs at the company. The move comes in the wake of a challenging period for the electric vehicle giant, with investors seeking reassurances.
What Happened: Wedbush analyst Dan Ives has urged Musk to shed light on the decision to lay off 10% of Tesla’s global workforce. This decision follows a quarter that saw a 20% drop in deliveries compared to the previous year, reported Business Insider.
High-ranking executives, including Drew Baglino, Tesla’s former senior vice president of powertrain and electrical engineering, and Rohan Patel, Tesla’s former vice president of public policy and business development, have also exited the company. Ives has described Baglino’s departure as a significant blow to Tesla due to his role in the development of Tesla’s Model 2.
“The Street wants and NEEDS answers next week on Tesla’s 1Q conference call next Tuesday, April 23rd after the bell as the string of bad news over the last few months has been a horror show for investors in the Tesla story,” Ives wrote in a memo according to the report.
“We need to hear the rationale for the cost cutting, the strategy going forward, product roadmap, and an overall vision from Musk otherwise many investors might head for the elevators during this Category 5 perfect storm of weak demand Tesla is seeing globally in 2024,” wrote Ives.
Since the start of the year, Tesla’s stock has plummeted by 35%, and several banks have lowered their price targets for the automaker. Despite these challenges, Wedbush maintains its “outperform” rating for Tesla and has reaffirmed its $300 price target for the stock.
Why It Matters: The recent layoffs at Tesla are not the first sign of trouble for the company. In February, Tesla was reported to be considering mass layoffs as it faced a slowdown in sales growth. The company’s management had asked U.S. managers to categorize their team members’ roles as either critical or non-critical. This move was seen as a cost-cutting measure in preparation for future expansions.
Meanwhile, the tech industry has been experiencing a wave of layoffs, with companies like Google and Amazon also implementing significant workforce reductions. These layoffs have been attributed to a variety of factors, including cost-cutting measures and shifts in business strategies.
Despite the challenges, Tesla has continued to forge ahead with its expansion plans. In April, the company announced that it would be laying off over 14,000 employees, reportedly to cut costs and eliminate duplicate roles. This move was seen as a response to the company’s disappointing quarterly performance and a way to streamline operations for future growth.
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Benzinga Neuro, Edited by Kaustubh Bagalkote
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Posted In: TSLA
