Investors punished Tesla on Friday after embattled CEO Elon Musk announced thousands of layoffs and admitted the company’s electric cars are overpriced, sending the stock down 13 percent to $302 by the end of the trading day, NBC News reported.
“While we have made great progress, our products are still too expensive for most people,” Tesla’s 47-year-old CEO said in a letter delivered to the automaker’s workforce early on Friday. Musk also warned that “the road ahead is very difficult,” and critical steps must be taken to assure Tesla’s continued viability.
It’s a remarkable comedown for the high-flying stock whose company has suffered both from production struggles and the erratic behavior of its CEO. In September, Musk was forced to step down as chairman by the SEC and pay a $20 million fine for misleading investors in a tweet that he’d secured funding for a buyout of the company, NBC News adds.
For those looking at a half-full glass, the good news is that Tesla will likely remain in the black when it issues its fourth-quarter financial results in a few weeks, the second quarter in a row it will have delivered a profit. But earnings will clearly be down, signaled CEO Elon Musk as he announced plans to trim Tesla’s workforce by 10 percent.
The news from Tesla is bringing out both optimists and pessimists as the week comes to an end, reflecting a mix of good and bad news for the country’s largest manufacturer of battery-electric vehicles. Nowhere is that more obvious than on Wall Street, where Tesla shares have tumbled sharply, even as analysts hail the news of job cuts as a sign the analyst is getting a grip on margins, NBC News noted.