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Tesla stock under pressure as top executives depart

Tesla stock under pressure as top executives depart

Shares of Tesla (TSLA) are trading lower following a Reuters report that the automaker’s global job cuts will affect its largest markets: the US and China. The layoffs will impact the sales and engineering divisions, and come as two of the company’s top executives, Drew Baglino and Rohan Patel, leave the company.

Yahoo Finance anchors Seana Smith and Madison Mills discuss how Tesla could see rocky months ahead, particularly given certain consumer pressures.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance.

This article was written by Gabriel Roy.

Video Transcript


SEANA SMITH: Take a look at some of these trending tickers. First up, we’ve got shares of Tesla. You can see falling another 3.5% today. This comes following a Reuters report that the company’s global job cuts are going to include cuts to its largest markets the US and China.

Now, these job losses will impact sales. The tech sector’s engineering departments, they’re at Tesla this is according to the latest report. And I also want to point out, though, that this is on the heels of a leadership exit yesterday that was really of note on the street here, Maddie.

When we talk about one of Tesla’s top engineering executives leaving the company, there also reports that some of these job cuts that could affect up to 20% of people in some divisions there. So really just something to the effect that, hey, maybe some of the struggles that we have seen from Tesla in terms of underperforming the Street’s expectations.

We also know obviously across the board, when it comes to that lower than expected demand, that has really been a real issue here for Tesla. But maybe the worst of Tesla’s troubles is not behind it. And we could see a rocky couple of months ahead.

MADISON MILLS: Yeah, particularly when you look at some of the economic data that we’re hearing when it comes to increased costs, and insurance, things like that are going to be weighing on consumers who are looking to the car market. But to your point about senior executives leaving, we know that one of the senior VPs Drew Baglino resigning this morning, and Wedbush’s Dan Ives saying that exit is quote, an absolute gut punch loss that the pressure on the stock today is being exacerbated by that news, which was unexpected.

Obviously, the job cuts leading to some of the major declines that we’re seeing in the Tesla stock this week. It’s on track to near its 12-month low as of this morning. The market value for the name falling $500 million here.

So just continuing to really have some downward pressure on the name. And then you have those cost cutting measures that they’re having with, the vehicles that they’ve got. And the big question from Wall Street is, why is that justified? And if you’ve got these headcount issues and retention issues, why are you still continuing to cut costs?

SEANA SMITH: Yeah, exactly. And I think it’s just a series of a long list of negative developments here for Tesla. We talked about the fact that the stock has been under significant amount of pressure this year. Shares are off over 30% since the start of the year.

So when you have headlines like this, it’s really points to the narrative that it’s going to likely be more tough times ahead for Tesla. When it comes to that second executive who also announced that he was leaving Rohan Patel, he was a car carmaker’s vice president of public policy, and also business development.

He confirmed his departure on Twitter. And Elon Musk actually responded to that post thanking both of the executives for their time and what they have done here to help Tesla along the way. But again, key leadership departures, and also the fact that the company is cutting up to 10% or the 10% of its workforce there. A bit of a worrisome sign here for shareholders, for analysts when we talk about what’s to come from Tesla next.

MADISON MILLS: Absolutely.