Tesla: News of Job Cuts Triggered Shares Sell-Off

Written by Larince Zhang

Elon Musk, CEO of the electric vehicle behemoth Tesla, has recently been reported of possible headcount trimming by 10%, following uncertainty over economic outlook. That would account for an approximate 10,0000 employees to be laid off.

Earlier, there was news that Musk stated in his email “to pause all hiring worldwide”. He has also demanded employees “to return to office or leave”, in the midst of resurgence of Covid-19 in California, in which one of its most advanced automotive plants is located. The threat of virus has been significantly reduced, however, it is also an undeniable fact that return-to-office resistance is real.

Fig. 1: Number of Tesla Vehicles Delivered WorldwideSource: Statista.

The company has delivered more than 300,000 units of vehicles during Q1 2022, up 68% from the same period last year. Despite the increasing R&D cost incurred, total revenue of the company stood at $18.7B, up 81% from the same period a year ago. About 90% of the revenue contributed by vehicle sales, whereas the rest 10% contributed by energy-related services and insurance services. The latter saw an increase in revenue by 24.7% and 43.23% respectively from prior year ago. EPS were reported at $3.22, over market consensus by more than 40%.

Be it a major staff cut, or voluntary resignation due to displeasure over Musk’s return to office plan, coupled with ongoing supply chain issues, increasing competition and rising costs following inflationary pressures – these factors would serve as headwinds to Tesla’s development in near term. Could Tesla produce over 1.5 million vehicles by the end of this year? That remains a question.

Technical Analysis:

Throughout the first half of 2022, #Tesla share price was traded in a downtrend, in the form of ABCD structure. The company share price saw its highest point in the beginning of January, at $1207.88 (point A), before retracing to a lower point at $710 (point B) in late February. Its share price found support and rebounded, forming a lower high at $1152.64 (point C), before retracing again and formed a lower low at $620.55 (point D). In near term, the company share price remains directionless as it consolidated between $786.50 (FR 50.0% extended from lower leg seen in September 2020 to the highest point seen in November 2021), the minor support $678.72 (FR 61.8%) and the lowest point seen on 24th May, $620.55. To trade higher, the asset price must break above $786.50 and the upper line of descending wedge, towards the next resistance target at $894 (or the 100-day SMA) and $1028. Otherwise, a strong bearish candlestick close below the minor support, $620.55 and the lower line of descending wedge may indicate bearish possibility for the price to test the next support at $525 (FR 78.6%), $450 and $330.

About the author

Larince Zhang

长达八年的实盘操作与市场分析经验。涉足的金融产品包含外汇、大宗商品、股指、商品期货、指数期货以及股票。大学主修金融学,秉持着学以致用的心态务必把课堂上所学的知识与临场实践经验相结合。 经过多年交易经验的积累与总结,坚信“大道至简”四字箴言。价格的变动即是幕后人为交易买卖所驱使。坚信市场考验的不是技术,而是人心。唯有正确的交易认知、缜密的策略布局与严谨的资金管理,方才是成熟交易的真谛。

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