Source: Finance Association
① After releasing unsatisfactory delivery data for the first quarter, it was recently rumored that Tesla will lay off more than 10% of its employees. ② Dan Ives, a well-known Tesla analyst at Wedbush, believes that after experiencing the difficulties of the previous few months, Musk now urgently needs to explain the recent layoffs to the market on next week's earnings call in order to regain investors' confidence.
The last few months have clearly been a difficult trough for Tesla. After releasing unsatisfactory delivery data for the first quarter, Tesla recently revealed that it will lay off more than 10% of its employees.
Dan Ives, a well-known Tesla analyst at the US investment bank Wedbush, believes that after experiencing the difficulties of the previous few months, Musk now urgently needs to explain the recent layoffs to the market during next week's earnings call in order to regain investors' confidence.
Are Tesla's layoffs an ominous sign?
On April 15, Tesla sent an email to all employees announcing that it would lay off 10% of its employees globally. Shortly after, the company released disappointing first-quarter delivery figures, with deliveries falling nearly 9% year over year, the first decline in quarterly deliveries in nearly 4 years.
Tesla currently has about 140,000 employees worldwide, and this layoff may affect at least 14,000 employees. Tesla's stock price closed down 5.6% on Monday, approaching its lowest closing level in a year.
In recent months, market investors' confidence in Tesla has continued to be lost. The decline in Tesla's stock price during the year has extended to 35.01%, and many investment banks have drastically lowered the company's target share price.
Ives warned that as can be clearly seen from Monday's decline, the layoffs are a negative sign for Tesla. Ives said:
“This is an ominous sign that Tesla will face a difficult period in Musk's response to this Level 5 storm... Global demand has been weak, and unfortunately this is a necessary step for Tesla to cut costs against the backdrop of weak growth prospects.”
Amidst this layoff, a number of high-profile executives have also left Tesla, including Drew Baglino (Drew Baglino), Tesla's former senior vice president of powertrain and electrical engineering, and Rohan Patel (Rohan Patel), a former vice president of public policy and business development.
Ives said that considering Baglino's participation in the development of Tesla Model 2, losing Baglino was “definitely a blow” for Tesla.
Musk needs to explain to the market
Ives believes that for Musk, the key to saving market confidence will be next week's earnings call.
Ives wrote in the report: “Wall Street wants and needs answers on Tesla's first quarter conference call next Tuesday (April 23) because the string of bad news over the past few months has made investors afraid of the Tesla story.”
Ives believes Tesla may lose investor support if it fails to explain the current situation and appease Wall Street's concerns.
“We need to hear Musk's reasons for cutting costs, future strategy, product roadmap, and overall vision, otherwise many investors may choose to leave Tesla's 2024 super-perfect storm of weak global demand.”
In addition to Tesla's earnings data, demand prospects, and future strategies, the market is also expecting Tesla to reveal more news about future growth stories.
Investors and analysts believe part of Tesla's huge growth story will be its long-rumored next generation car. It is rumored that Tesla's next generation car will start at only 25,000 dollars. However, last week there were reports that Tesla had cancelled this car, but Musk responded that the report was untrue.
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