Tesla stock drops on report it's laying off 10% of workforce

Tesla (TSLA) is set to lay off more than 10% of its global workforce, according to a report from Electrek citing an internal email from CEO Elon Musk. Musk writes the layoffs will set Tesla up to "be lean, innovative and hungry for the next growth phase cycle."

Yahoo Finance Reporter Pras Subramanian joins the Morning Brief to discuss the details of the announcement and Tesla's Q1 report.

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This post was written by Nicholas Jacobino

Video Transcript

SEANA SMITH: Well, let's turn to Tesla, a big story out this morning. Shares of the EV maker, well, they have certainly struggled so far this year, off more than 30% since January 1. But the big report out this morning that the company is looking to cut costs, potentially laying off or is laying off more than 10% of its global workforce. Yahoo Finance's Pras Subramanian has been following the story. He joins us now with the latest on those details. Pras.

PRAS SUBRAMANIAN: Hey, Seana. What's up? So yeah, basically, "Electrek," the blog, the tech blog, basically had this-- they got an email from-- or secured an email from Elon Musk confirming that 10% of staff are going to be cut at Tesla. He's talking about how they want to set themselves up for the next growth cycle of the company. And the layoffs, there were some redundancies there, but they were painful but needed to be done.

You know, I can't say that we were surprised, you know, to hear that following their Q1 delivery report, where such a massive buildup in supply, something needed to happen here. And I think that's what's going on right now with the stock. You've seen the reaction there to the downside here, not exactly a positive move. I think we're hearing from Wall Street analysts like Dan Ives telling me that it's an ominous sign for the company to be doing this right now, given the fact that they're navigating this, quote unquote, "category 5 sort of storm" here with their demand story.

I also want to add separately that the "Electrek" blog reported that the Cybertruck was actually going to have its production shift length shortened. And that sort of kind of flies in the face of what we've been hearing about demand for that truck, which supposedly is off the hook. So a lot of things happening there in Tesla land right now.

BRAD SMITH: Pras, what should investors keep tabs on as we're waiting for more of the details to really develop around this? And how do they price it into the stock going forward?

PRAS SUBRAMANIAN: You know, I would have expected maybe a move to the upside here. Whenever you hear about other automakers doing sort of similar moves, not to the extent of 10%, but I guess it's sort of-- it's so extreme that investors, or maybe Wall Street even, a little bit concerned here about the fact that, is the demand sort of even worse than what we're hearing?

We're going to get earnings from the next week, so we'll have a better idea. We're probably going to ask about Cybertruck demand, ask about what the labor sort of story is looking for Tesla right now as it sets up for a potentially that Gen-2 vehicle that we heard about, and then it kind of went off the table, and now it might be back on. So we'll see what happens next week.