- Through an email, Elon Musk stops new hires and warns that he may fire 10% of Tesla workers.
- Musk has been warning of a possible recession for several weeks.
- Tesla’s share price fell more than 3% from Friday’s open on the news.
- Stock researchers Cowen also cut their second-quarter delivery estimates for the company.
Tesla CEO Elon Musk has a bad feeling about the current situation in the economy, because of this he is going to fire 10% of Tesla employees seeking to avoid further losses to the company.
This was known through a statement made by email to company executives, the same statement was leaked to Reuters.
The message is titled “Pause all hiring worldwide” and comes to a couple of days after Elon Musk commented that all workers should return to their jobs or else leave. Tesla employed about 100,000 workers at the end of 2021 according to the annual presentation delivered to the SEC.
Commenting on Musk’s directive to return to face-to-face work, Jason Stomel, founder of tech talent agency Cadre, says:
“I think there is a possibility that this is just a covert dismissal, which means they can get rid of people with attrition, or without having to do it formally as a dismissal.”
Jason Stomel, founder of tech talent agency Cadre
The statement does not describe why Musk has a bad feeling about the economic outlook. These statements by the CEO of Tesla follow the same line, and that is that Elon has been commenting on the risk of a possible recession for several weeks.
Carsten Brzeski, global head of macroeconomic research at Dutch bank ING, comments that it is not only Elon who shares this bad feeling about the economy, many more also see a recession coming in the coming months, Carsten also says:
“But we are not talking about a global recession. We expect a cooling of the world economy towards the end of the year. The United States will calm down, while China and Europe will not recover.”
Carsten Brzeski, global head of macroeconomic research at Dutch bank ING
Others who share the same gloomy outlook as Musk include JPMorgan Chase, Jamie Dimon, and Goldman Sachs, John Waldron.
In late May, when Musk was asked by a Twitter user if the economy was nearing a recession, Musk said, “Yes, but this is actually a good thing. He has been raining money on fools for far too long. Some bankruptcies need to happen.”
Due to the news, Tesla shares fell more than 3% from the opening of this Friday, and 9.19% from the closing price of the day Thursday. In addition to this, Tesla has had a drop of more than 25% so far this year.
Adding to this, on Friday, Cowen stock researchers cut their second-quarter delivery estimates for Tesla, taking into account impacts in China. Deliveries are the closest approximation to Tesla’s reported sales figures.
Cowen managing director and senior research analyst Jeffrey Osborne wrote in a note on Friday: “China is Tesla’s most profitable facility, so we see the loss of around 50,000 to 60,000 vehicles also reduce profitability, which will be exacerbated by the ramp-up challenges in Berlin and Austin for the Model Y.” Tesla’s new factory outside Berlin began production in May.
In addition to his Tesla concerns, Elon Musk is also in the midst of a deal to acquire Twitter’s social network for $54.20 a share, or $44 billion. As Tesla shares fall, so do some of Musk’s capital resources.
