TuSimple Layoffs: What to Know About the Latest TSP Job Cuts

  • Shares of autonomous transportation system specialist TuSimple (TSP) popped on Monday.
  • The tech firm plans to cut at least half of its workforce amid myriad troubles.
  • TSP stock likely moved higher on cost-saving implications but concerns remain.
TuSimple layoffs - TuSimple Layoffs: What to Know About the Latest TSP Job Cuts

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A contrast in implications, shares of autonomous truck-driving systems provider TuSimple’s (NASDAQ:TSP) stock popped higher on Monday morning. However, the catalyst for TSP stock stemmed from a less-than-encouraging development. Last week, news broke that management intended to cut at least half of its workforce. The TuSimple layoffs come amid worrying signs for the embattled enterprise.

According to a Reuters report, the cuts would likely impact at least 700 employees, citing people familiar with the matter. Based in San Diego, California, TuSimple also features operations in Arizona, Texas and China. Though Reuters requested comment, the company’s leadership team did not immediately respond.

Per the Wall Street Journal, which originally broke the story, its sources said the TuSimple layoffs could go even deeper. As of June, TuSimple had 1,430 full-time employees globally. In addition, the plans for headcount reductions follow the removal of the autonomous driving system specialist’s chief executive.

In October, the WSJ reported that TuSimple fired co-founder and CEO Xiaodi Hou after its board concluded that the company shared confidential information with Hydron, a trucking startup mainly operating out of China. In addition, Chinese investors mostly funded Hydron.

If that wasn’t bad enough for TSP stock, the WSJ also noted in the October story that the Federal Bureau of Investigation (FBI), the Securities and Exchange Commission (SEC) and the Committee on Foreign Investment in the U.S. (CFIUS) were all investigating TuSimple for corporate finance violations and illegal technology transfers to Hydron.

Extraordinarily, the ousted Hou then joined forces with TuSimple co-founder Mo Chen, who together fired the board. Complicating matters in an already intricate situation is that Chen also leads Hydron. Later, the pair brought back TuSimple president and former CEO Cheng Lu to man the executive helm.

Wild Circumstances Underline the TuSimple Layoffs

Although the distribution of pink slips represents a common action among embattled organizations, the TuSimple layoffs go beyond the realm of the ordinary. Along with the shakeup at the top and the federal investigations, the company incurred a series of setbacks.

In April of this year, the WSJ reported that a TuSimple-system-integrated autonomous truck suffered an accident. Per the account, the truck “suddenly veered left, cut across the I-10 highway in Tucson, Ariz., and slammed into a concrete barricade.” Naturally, concerns immediately centered on public safety regarding TuSimple’s autonomous technology.

Unfortunately, the incident attracted a separate federal investigation. TuSimple blames human error, specifically resulting from an improper rebooting procedure by a driver-engineer team. However, analysts suggest a fault in the autonomous driving system. Either way, the matter dented the company’s reputation, fueling the current TuSimple layoffs.

As well, the WSJ mentioned that the autonomous transportation enterprise lost key business partnerships. With the firm struggling to generate significant revenue, TSP stock plunged. At the time of writing, shares lost more than 95% of their equity value. This too perhaps made the TuSimple layoffs inevitable.

To be fair, TSP did jump more than 8% at one point in the afternoon session, possibly stemming from the cost-cutting implications. However, with the TuSimple layoffs also negatively affecting the team responsible for the underlying algorithms, the enterprise risks becoming an ineffective shell of its former self.

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On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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