Tesla stock is continuing its months-long descent on Tuesday after mass layoffs swept through the company’s operations in Texas and executives resigned.
The stock fell nearly 5% in trading Tuesday, before rebounding to a roughly 2.6% decline as of 12:30 p.m. ET. Its valuation briefly fell below $500 billion Tuesday, before bouncing back to about $500.71 billion. Tesla’s market capitalization hasn’t dropped below $500 billion since late April 2023.
Tesla stock has fallen more than 36% so far in 2024, making Tesla one of the worst performers in the S&P 500, only matched by Boeing and insurance company Globe Life—the latter of which is being targeted by short-sellers and has dropped 54%. It’s shed more than $290 billion in market value.
Tesla stock has suffered this week after CEO Elon Musk sent the company’s roughly 140,000 employees a late Sunday night memo informing them of layoffs. “More than 10%” of workers—or at least 14,000 people—have lost their jobs, according to a regulatory filing.
The layoffs come after an abysmal first fiscal quarter that saw the electric vehicle maker fall far short of Wall Street’s sales expectations. Musk cited a “duplication of roles and job functions in certain areas” that sprung up as the EV maker expanded its operations across the U.S., Europe, and Asia.
“There is nothing I hate more, but it must be done,” he added in the memo. “This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
Two of Tesla’s highest-profile and public-facing executives resigned Sunday ahead of the layoffs; Andrew Baglino, Tesla’s senior vice president for energy engineering and powertrain, and Rohan Patel, Tesla’s vice president of public policy and business development.
Baglino—who first joined Tesla in 2006 and worked on the original electric Roadster—was leading many engineering products at Tesla, including the cathode factory in Austin, Texas, and production of 4680 battery cells. Tesla’s head of cathode materials and manufacturing, Anthony Thurston, has been laid off.
Both projects are behind schedule and the cathode factory plan is a “financial black hole,” Elecktrek reported, citing a person familiar with the matter. The factory is intended to supply Tesla with processed cathode for battery cell assembly at Gigafactory Texas.
Electrek on Monday confirmed a prior report from Reuters, which stated that Tesla was shelving plans for an affordable electric car in favor of going all in on self-driving vehicles. Musk has alleged that Reuters was “lying,” even as he announced an August 8 date to unveil Tesla’s robotaxi.
Tesla’s plans to expand Giga Texas to work on the new EV has been completely defunded and many workers involved in the project have been laid off, Electrek reports. Tesla has reallocated resources to focus on the self-driving car program and aims to build a new data center in an ongoing expansion at the Texas factory, which it wants active by August 20.
The expansion plan is expected to face logistical and environmental challenges. Electrek reports that several people involved with the project—including Amir Mirshahi, the factory’s head of infrastructure—have been laid off.