Why Tesla stock hit today? – The Motley Fool

What happened

Actions of the electric car company. Tesla (NASDAQ: TSLA) it slipped on Friday, falling 8.8% at 9:54 a.m. ITS T.

The decline in shares comes after CEO Elon Musk sent a letter to employees announcing a 7% reduction in the workforce as part of an effort to reduce costs and remain profitable.

Production of vehicles at the Tesla factory in Fremont, California.

Source of the image: author.

And that

"Tesla has only been producing cars for about a decade and we are facing mbadive and entrenched competitors," Musk wrote in the letter, which was also posted on the company's blog. "The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable and sustainable products."

The company is reducing its number of full-time employees by approximately 7% and is retaining "only the most critical contractors and employees," said Musk. In addition, he said that Tesla will have to continue increasing the production of the Model 3 at the same time that it brings to the market variants of lower cost of the vehicle to see better economies of scale and reach a wider market. It should be noted that Tesla's workforce will continue to be significantly higher than in 2017, as the company increased it by 30% in 2018.

Now what

For the fourth quarter that ended recently, Tesla estimated in the letter that it will report a GAAP gain lower than in the third quarter. This means that it will be lower than Tesla's GAAP benefit in the third quarter of $ 312 million, or $ 1.75 per share.

For the first quarter of the company, a profit is possible but less likely. "This quarter, as in the third quarter, sending variants of Model 3 to a higher price (this time to Europe and Asia) will allow us, with great difficulty, effort and some luck, to aim for a small profit "said Musk.

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