Tesla Layoffs 2022: What to Know About the Latest TSLA Job Cuts, Hiring Freeze

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  • Shares of Tesla (TSLA) stock are recovering today on media reports that the company is planning staff layoffs and a hiring freeze.
  • The uptick in the share price today comes after the stock fell 8% in the previous trading session.
  • Investors are increasingly worried about a host of issues at the electric vehicle maker, including slowing demand in China.
TSLA stock - Tesla Layoffs 2022: What to Know About the Latest TSLA Job Cuts, Hiring Freeze

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Tesla’s (NASDAQ:TSLA) stock continues to draw attention as media reports surface that the electric vehicle (EV) maker is planning to lay off more staff and implement a hiring freeze in the New Year.

TSLA stock plunged 8% yesterday (Dec. 20) to close at $137.80 a share, its lowest level in more than two years as investors grow increasingly skittish about a host of issues that include chief executive officer (CEO) Elon Musk’s preoccupation at Twitter, lower demand in China, and a number of recalls impacting Tesla’s electric cars and SUVs. The share price is down 66% in 2022.

Today (Dec. 21), TSLA stock is up 2% in the premarket as investors digest the news of impending cost-cutting measures at the automaker.

What Happened

Multiple media reports claim that Tesla is planning to undertake layoffs during the first quarter of 2023. While no official announcement has been made, the media reports state that Tesla plans to also freeze hiring on a go-forward basis as it seeks to reduce its headcount and costs in the wake of slowing demand for its electric vehicles, notably in China where ongoing Covid-19 lockdowns have hurt consumer spending.

A number of analysts who cover Tesla have cut their price targets on the stock in recent weeks, citing weak demand as the global economy slows and sales in China soften, impacting the company’s deliveries. There are also growing concerns among analysts and investors about CEO Musk’s ongoing distraction with Twitter, the social media company he purchased in late October for $44 billion.

Why It Matters

If the media reports prove true, this would not be the first round of layoffs at Tesla. Musk announced this past June that Tesla would cut its salaried workforce by 10% to help achieve cost savings. However, the company reversed course somewhat in the second half of the year and hired some additional staff.

In addition to slowing hiring, Tesla has also been offering incentives to entice buyers. In recent months, Tesla reduced the price of its cars in China by between 5% and 9%. In the U.S., the company is running a promotion offering $3,750 off the price of its Model 3 and Model Y vehicles to people who purchase one by Dec. 31.

The Tesla Layoffs and What’s Next for TSLA Stock

Investors appear to be reacting favorably to news that Tesla plans to undertake layoffs and freeze hiring in the coming months. Other media reports that Elon Musk plans to find someone else to run Twitter also seem to have investors in a good mood. However, there continue to be issues that are likely to weigh on TSLA stock in the near term, not least of which is a slowing global economy and weak demand in China. Proceed with caution.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/12/tesla-layoffs-2022-what-to-know-about-the-latest-tsla-stock-job-cuts-hiring-freeze/.

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