Tesla Inc TSLA shares are trading lower Monday following reports the company is planning to lay off between 10% and 20% of its workforce. Wedbush’s Dan Ives reacted to the news in a new note released Monday afternoon.
What Happened: According to an Electrek report, Tesla has told employees it will begin shortening shifts as it prepares for a fresh round of layoffs that could impact up to 20% of the company’s workforce. Tesla stock was last down more than 4.75% on the news.
As pointed out by Ives, the selling pressure on Tesla shares is being exacerbated by additional reports that two key Tesla execs, Drew Baglino and Rohan Patel, will be leaving the company.
“Baglino is an absolute gut punch loss in our view as he was instrumental in the Powertrain and Energy initiatives at Tesla and was viewed by many as key to the Model 2 initiative over the next few years,” Ives said in a new note to clients.
Given the negative attention on Tesla in recent months as a result of continued cost cuts in the face of slowing demand trends, it’s time for the company to give investors some answers when it reports next week, the Wedbush analyst said.
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Tesla will report financial results for the first quarter after the close on April 23. Analysts are anticipating earnings of 53 cents per share on revenue of $22.605 billion, according to estimates from Benzinga Pro.
Not only does the Street want answers, but it also needs answers, as the string of bad news in recent months has been a “horror show” for investors, killing Street confidence, Ives said. CEO Elon Musk has reached a fork in the road and needs to find a way to either guide Tesla through the turbulence or face the dark days ahead, he added.
“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,” Ives said.
Although Ives maintained Tesla with an Outperform rating, the analyst acknowledged that Tesla’s future now appears “a bit murky,” as attention shifts to what Musk has to say on next week’s earnings call.
TSLA Price Action: Tesla shares are down approximately 34% year-to-date. The stock was down 5.21% at $162.13 Monday afternoon, according to Benzinga Pro.
Photo: courtesy of Tesla.
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