Tesla Falls As Musk Reportedly Wants To Cut 10% Of The Workforce

Key Insights

• Reuters reports that Elon Musk wants to cut as much as 10% of jobs at Tesla due to the problems in the economy. 
• The stock has immediately found itself under pressure after the release of this report. 
• Tesla is trading at more than 45 forward P/E, and analyst estimates have started to move lower, which may put additional pressure on the stock. 

Tesla Retreats As Musk Has A “Super Bad Feeling” About The Economy

Shares of Tesla gained downside momentum after a Reuters report indicated that Musk wanted to cut about 10% jobs at the company due to a “super bad feeling” about the situation in the economy.

Not surprisingly, traders rushed to sell Tesla stock after the release of the report. Currently, the stock is down by more than 7%.

Fears about the slowdown of the economy have put serious pressure on markets this year, but markets have enjoyed a strong rebound from recent lows as traders bet that the Fed would not be too hawkish in the upcoming months.

Musk’s desire to cut as much as 10% of the workforce shows that even Tesla is not immune to problems faced by the auto industry.

What’s Next For Tesla Stock?

Analyst estimates for Tesla have recently started to move lower. Currently, analysts expect that Tesla will report earnings of $12.14 per share in 2022 and $15.87 per share in 2023, so the stock is trading at 46 forward P/E.

While current valuation levels are cheaper compared to the times when Tesla stock traded above 100 forward P/E, investors must keep in mind that the company remains expensive.

It remains to be seen whether traders will be ready to increase purchases of Tesla stock at current valuation levels at a time when the company looks ready to cut workforce due to the slowdown of the economy.

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