Tesla Is Reportedly Planning Layoffs. Are Musk's Twitter Antics To Blame?

Elon Musk has reportedly ordered a hiring freeze at Tesla and told his lieutenants at the EV company to brace for a free round of layoffs. According to a report by Electrek, Tesla has already told employees that fresh hirings have been put on hold and that some teams will lose manpower early next year. However, these plans reportedly won't affect Tesla's expansion targets for the coming quarters.

This latest upheaval — if it's true — marks the second time that Tesla is shaving off the headcount. In June this year, Tesla put a temporary pause on fresh hirings and also moved ahead with laying off 10% of its staff. Unfortunately, the report doesn't mention which departments are the worst affected as part of the latest resource rejig at Tesla, and why exactly these cost-cutting measures are being implemented in the first place. However, a quick look at Tesla's continuously falling stock prices in the past few quarters may offer a hint.

In simple terms:

As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are *not* guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop.

— Elon Musk (@elonmusk) December 20, 2022

Ever since Musk went public with his $44 billion takeover of Twitter, the price of Tesla stock has tanked, and right now, the company is inching towards its worst quarter ever. Tesla stock has lost over half of its value since April, but Musk continues to assure that the company is doing better than ever. Instead, the billionaire has blamed the downward spiral of Tesla stock on global macroeconomic variables and the feds.

Not everyone is buying Musk's arguments. Fingers are being pointed in his direction at the moment, and from Tesla investors, no less. Ever since Musk disclosed his intentions to run the show at Twitter, concerns were raised that the social media platform will distract him from his duties at Tesla. Back then, Musk promised that won't happen and assured investors that Tesla will always be his top priority.

Ross Gerber, chief of Gerber Kawasaki Wealth Management, which is also an investor in Tesla, told Bloomberg that Musk should hire someone with the right social media experience to run Twitter. "I think he just got himself maybe over his skis in an area that he's just not suited to deal with the subtleties of," he said. In a tweet, Gerber mentioned that "Tesla stock price now reflects the value of having no CEO." Tesla's third-largest shareholder, Leo Koguan, tweeted last week that "Elon abandoned Tesla and Tesla has no working CEO."

Another investor, Joseph Cirincione, wrote in The Daily Beast that "Musk's erratic behavior on Twitter raises serious questions about his mental stability and management ability." He separately tweeted that he wants Musk to get off Twitter. Musk, on the other hand, recently conducted a poll asking users if he should step down as Twitter's CEO. A majority of the respondents voted in favor of Musk's departure, but the billionaire says he will step down when he finds someone foolish enough to take over.