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It is not clear how long the hiring freeze will last as the company is expanding its factories, which means it needs to bring in more employees.
Elon Musk‘s EV maker Tesla Inc (NASDAQ: TSLA) is reportedly planning to conduct a round of layoffs as soon as next quarter. According to those familiar with the matter, the reason behind such a step is Musk’s “very bad feeling about the economy.” The company will also put on hold its hiring process across its locations worldwide.
Notably, Tesla just resumed the recruitment process after suspending it back in June. At that time, Musk said that a 10% cut of its workforce would be required. Besides, in the emails sent to employees, Musk announced the ending of the remote work option. In other words, those who didn’t want to return to the office should leave the company. In addition, in June, Tesla announced shutting down its office in San Mateo, which cost 200 of the EV maker’s staff to lose their jobs.
Elon Musk himself explained that the problem in Tesla’s performance is a general one and relates to the stock market that results from rising bank account interest rates and general market volatility rather than any specific challenge facing Tesla.
It is not clear how long the hiring freeze will last as the company is expanding its factories, which means it needs to bring in more employees. Recently, Tesla received the green light from the Grünheide municipality for its plan to expand the Gigafactory site near Berlin by 100 hectares. There were also reports about the planned water supply and the workforce at the German Tesla factory. Besides, Tesla is also reportedly expanding its business in Turkey. mNotably, this market has been asking for Tesla services for years now.
Following the announcement about layoffs, Tesla stock closed the trading session 0.17% down, at $137.57 per share. After hours, it added 0.58% to $138.37. The market cap of Tesla totals $435.14 billion. Year-to-date, Tesla stock is as much as 60.95% down.
Tesla’s Poor 2022 Performance
The EV giant is now having a tough time. Firstly, its revenue for the third quarter missed estimates, reporting a revenue of $21.45 billion vs the $21.96 billion projected by analysts polled by Refinitiv. As a result of missing the target, Tesla stock declined. Secondly, its CEO Elon Musk keeps selling his Tesla shares, which also undermines the company’s performance. In November, following his takeover of Twitter, Musk sold 19.5 million Tesla shares worth $3.95 billion. Last week, he sold another 20 million shares of the company with the accrued funds coming in at over $3.5 billion. Before offloading the shares, Elon Musk owned roughly 25% of Tesla in stock and options. Currently, the billionaire is still Tesla’s largest individual shareholder, with 423.6 million shares that give him a 13.4% ownership position in the company.
Further, after closing the Twitter deal, critics say that Elon Musk got distracted from Tesla’s business, which also led to the company’s downturn.