Tesla shares plummeted Tuesday after CEO Elon Musk reportedly told executives he needed to scale back hiring and cut jobs due to growing concerns over the economy, adding to worries about the electric-vehicle maker that have spurred staggering losses for its shares this year.
Tesla shares fell 9% Tuesday to below $704, pushing the stock down more than 40% from its all-time high in November and wiping $75 billion from Tesla’s market capitalization, which now stands at $728 billion.
Triggering the plunge, Reuters reported early Friday that Musk sent an email to executives on Thursday saying he has a “super bad feeling” about the economy and needed to cut roughly 10% of jobs, or as many as 10,000 workers.
Though Musk’s specific concerns about the economy weren’t disclosed, the billionaire last month said the U.S. was “probably” already in a recession that may last as long as 18 months, blaming the government for feeding inflation through stimulus measures.
Despite Musk’s concerns, economists have been more upbeat: In a note to clients last week, Goldman Sachs’ Jan Hatzius said fears of declining economic activity “will prove overblown unless new negative shocks materialize,” pointing to the hot labor market and better-than-expected earnings last quarter as signs of ongoing growth.
Adding to pressure for Tesla stock, the National Highway Traffic Safety Administration on Friday revealed more than 750 Tesla owners have complained about their vehicles suddenly braking at high speeds—more than double the number the regulatory agency, which is probing Tesla over its autopilot feature, disclosed in February.
Also on Friday, Cowen analyst Jeffrey Osborne lowered his price target on Tesla shares to $700 from $790, saying he expects the company will face challenges in achieving its production targets for the second quarter given the impact of Covid lockdowns in China that stunted production at Tesla’s Shanghai facility in March and April.
Even though its stock has struggled, Tesla reported its most profitable quarter in company history last month, posting $3.3 billion in first-quarter income fueled by record deliveries.
Shares of Tesla have racked up big losses since Musk suggested he would sell about 10% of his stake in November, with prices only collapsing further as the broader market struggles in the face of rising interest rates. Meanwhile, investor concerns over Musk’s offer to take Twitter private and supply-chain constraints have also dragged sentiment down. Tesla has plunged 41% this year, while the tech-heavy Nasdaq is down 24%.
The NHTSA has opened multiple investigations into Tesla over separate safety-related issues, many involving the potential use of the carmaker’s autopilot feature. Last month, the agency started probing a car crash in April that killed three people and involved a 2022 Tesla Model S potentially running on autopilot, and in December, it launched an investigation into 580,000 Tesla vehicles sold since 2017 over features that allow drivers to play games on the front-center touchscreen while a vehicle is running.