February 3, 2023

Elon Musk’s Twitter obsession is hurting Tesla—layoffs are coming

Elon Musk's Twitter obsession is hurting Tesla—layoffs are coming

While Elon Musk focuses on his “hardcore” tactics Twitter, he’s leaving Tesla—its employees and its shareholders alike—in the lurch. According to electric vehicle news site Electreck, more layoffs and a hiring freeze are coming to Tesla in the first quarter. It’s more bad news for the company; in June, Musk asked Tesla executives to “pause all hiring,” cut a tenth of its staff, and closed a California office. 

The new report, stemming from a source familiar with the matter, comes at an already tense time for the controversial billionaire, though it remains unclear how extensive the hiring freeze will be; Tesla still intends to expand into more manufacturing locations, Electreck said.  

Investors sparred with an intransigent Musk on Twitter this week, sharing concerns that the Tesla CEO is distracted by his responsibilities at Twitter, which he bought in October for $44 billion and began leading last month. Chaos ensued immediately, with advertisers fleeing, journalists getting banned, senior leaders quitting, and thousands of employees losing their jobs. In a poll Musk himself posted on Twitter this week, most respondents urging him to step down as CEO.

Meanwhile, Tesla shares have been on the decline for months, sinking 8.1% Tuesday. Musk himself revealed he’d sold 20 million Tesla shares, worth about $3.5 billion, in a security filing last week.

Analysts have cut their price targets on Tesla stock, Reuters reported Wednesday, fearing weak demand from China will impact the EV maker’s delivery abilities.

For many Tesla investors, the reason for the share price isn’t a mystery. Ross Gerber, a major Tesla investor, tweeted Tuesday that “Tesla stock price now reflects the value of having no CEO,” and that it’s “time for a shake up.”

“Please tell us your great ideas, Ross,” Musk mused in a response tweet.

Gerber followed up with three: Tesla needs a media and communications team, it needs a succession plan and clarity on Musk’s potential return, and it needs to communicate about Musk’s stock sales. 

Last week, Tesla’s third-largest shareholder, Leo Koguan, tweeted that Musk “abandoned” the company, currently a rudderless ship. “Tesla needs and deserves to have [a] working full time CEO.”

Musk explained Tesla’s struggles, naturally, on Twitter. In response to Gerber, he blamed the U.S. Federal Reserve’s interest rate hikes for Tesla’s poor performance. 

“As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are *not* guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop,” Musk wrote. More briskly, he added, “Go back and read your Securities Analysis 101 textbook.”

Despite the public antics, Tesla is far from the only major company to initiate layoffs, or hint that they’re around the corner. Goldman Sachs, PepsiCo, Morgan Stanley, Kraken, Alphabet and Hewlett Packard, and Amazon have all let employees go.

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