As expected from industry watchers, Tesla announced Monday that it is laying off more than 10 percent of its workforce, losing around 14,000 jobs worldwide. CEO Elon Musk announced the cuts in a memo to the entire company, writing that they will “allow us to be lean, innovative and hungry for the next phase of growth.”
Many of the layoffs appeared to be effective immediately, with employees locked out of company systems by Monday morning. Separately, two top executives — Rohan Patel, vice president of public policy and business development, and Drew Baglino, senior vice president of powertrain and energy engineering — also signed their resignations, with Musk thanking both in X (formerly Twitter). Patel had been at Tesla for eight years, while Baglino was an 18-year veteran of the auto industry, dating back to the startup's early days.
The departures continue a trend of disappointing headlines for Tesla. Between improbable delivery numbers, increased competition in the electric vehicle market, Musk's preoccupation with extremist content on X and viral videos of brand-new Cybertrucks suffering all manner of malfunctions and failures (amid reports of a problem with the truck's gas pedal, customers have their orders were delayed), the company's stock price is down more than 35 percent year-to-date. JP Morgan recently cut their expectations for the company, whose next quarterly earnings call, scheduled for April 23, could bring even more bad news.
But among Tesla's advantages, at least in terms of valuation, is that $TSLA is a high-profile meme stock, consistently won by retail investors who love the brand or Musk or both. How bad would things have to get before these backers sell their shares?
“Musk needs to go immediately,” wrote one user on Discord's “investment” channel for the r/TeslaMotors subreddit. “Clearly these executives [Patel and Baglino] make a statement”. (The person's username currently includes the phrase “New CEO Plz.”) A second member speculated that the two were probably “tired of being part of the endless shilling of things that are years away.” Others bemoaned the clumsy launch of Tesla's latest offering. “Cybertruck should probably be canned,” said one reviewer, calling it “a disaster of a product” and arguing that it “will cost them more in the long run to continue as is.” Another user agreed that the flashy, futuristic and polarizing vehicle was a mistake given that rival EV makers are beginning to threaten Tesla's dominance, noting, “they need a fresh start and [Cybertruck] That was NOT it.”
On social media, banter circulated about another subreddit, r/teslasinvestorsclub, a community of more than 80,000 Tesla investors, suddenly going private. On the board of r/RealTesla, which funds itself as a place to discuss the company among “those who haven't drunk Elon-Ade,” a redditor he claimed that the group is currently holding a vote on whether to go private during next week's earnings call “due to the bad vibes in the comments in recent weeks.”
Wall Street's outlook, meanwhile, is openly bearish right now, with one analyst calling the layoffs “ominous” signed Tesla futures and institutional investor Gary Black, explaining to X why his Future Fund has continued to reduce its exposure to Tesla since late 2022.
Such warnings, however, have usually done little to prevent Tesla's most loyal soldiers from doubling down. “$TSLA bears and FUD lovers are out today like no tomorrow.” he tweeted a verified user X whose bio states that he is “ALL IN on Tesla stock,” referring to the “fear, uncertainty and doubt” surrounding the company. The acronym is often used by bullish traders to dispel any pessimistic reading about their investment. “Usually my signal is to buy more shares,” he added. Sawyer Merritt, a Tesla investor and influencer with a large following on X, posted one long post seeking to reshape the latest job cuts within Tesla's history. “For a company of its size, periodic workforce adjustments are normal, particularly during tough economic and/or growth periods,” Merritt wrote, concluding, “I see a lot of people in the X panic, but Tesla is still has a deep bench of talent/expertise.”
However, the fact that true believers try to quell the turmoil means that they feel it. “I think every indicator points to a slowdown in demand,” says a more skeptical investor with a decade of experience in private equity and investment management, who requested anonymity. Rolling rock. “You have the Chinese markets collapsing for Tesla BYD's Khan and other competitors to be released in the coming years. All the growth prospects for Tesla are evaporating and all the messages from within the company point to mismanagement and dire prospects,” he says.
That investor has shorted Tesla periodically over the past three years for a modest profit, he says. “I've had a bearish outlook on Tesla since at least 2020, as I believe their valuation as a technology company is regressive and irrational,” he explains. “The problem with these meme stocks is that all it takes is a large group of die-hards to float the stock. That's where we are now.” But while he's used to backlash from his peers about his appreciation of the brand, in recent months, he's “started to hear more and more people” discussing Tesla's prospects in a negative light. Like people wondering when the other shoe will drop.” Ultimately, he believes, “the writing is mostly on the wall when you have four consecutive quarters of underperformance.”
Aside from what appears to be a stagnant year ahead, not everyone is optimistic about what Tesla has in store. Earlier this month, Reuters mentionted that the automaker was dropping a long-in-development “Model 2” sedan that was supposed to cost around $25,000, making it the company's most affordable car and, in theory, expanding its customer base. Musk tweeted that the media was “lying down,” although he did not specify what was wrong with the article. The CEO has also expressed an interest in turning Tesla into a leader AI and roboticsand to that end recently stated that Tesla will unveil an autonomous “robotaxis” in August.
Of course Musk first promised in 2019 that Tesla would be operating a robotaxi by 2020. As with his perennially missed predictions of when Tesla will achieve fully autonomous self-driving — surely a prerequisite for a drone taxi — the reality has yet to set in. These days, Musk's assurances of revolutionary technology just around the corner tend to draw a lot of skepticism and derision.
Investors on Reddit's r/wallstreetbets, for example, laughed at the very idea that Musk would have a working robotaxi in a few months. A he joked that the event will be similar to when they “revealed the robot Optimus but it was actually a guy [in] a breakdancing suit,” referring to a ridiculed Presentation 2021 in which the idea for a humanoid Tesla robot was nothing more than a person wearing a helmet and bodysuit. Other was foreseen Musk unveiled “a regular Tesla driven by a dude in black” and told his audience to “pretend” he wasn't there.
On Monday, a member of r/wallstreetbets commemorated the Tesla layoffs with a video edit of Musk posing in a trash can and floating in floodwaters. “Thank you Memelord!” read the caption.
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