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Tesla plans to earn a profit, firing 3,5 thousand employees

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Tesla plans to earn a profit, firing 3,5 thousand employees
June 13
09:00 2018

A famous American high-tech company Tesla Inc is working towards achieving a break-even level of work. For this purpose, all means are good, so the company expects rather large layoffs. About 3.5 thousand employees will lose their jobs, which is approximately 9% of the company’s staff.

At the end of 2017, the corporation staff consisted of 37.5 thousand people. In 2018, the company continued to recruit, increasing the number of employees to 40 thousand people.

Tesla Chief Executive Officer Elon Musk wrote a memo for the employees, which says that the cuts and reorganization will affect absolutely all the company’s divisions. He stated that only the employees engaged in assembling electric vehicles will remain inviolable.

The planned tough measures had a positive impact on the dynamics of the company’s shares growth, on Tuesday they grew by 3.2%.

It should be noted that over the past year the company has lost 8.8% of its capitalization. The reason is simple – Tesla has not been able to bring the production of electric vehicles to the target level.

What is more, in the entire history of the company (this is almost 15 years) Tesla has never been able to record profits in the year. This fact negatively affects the reputation of the company and its capitalization too. Also, the company’s failure to reach the target level of electric vehicle production led to the fact that the authoritative international rating agency Moody’s Investors Service worsened Tesla’s ratings. Analysts at Goldman Sachs do not expect that the company will be able to generate a positive free cash flow by the end of 2020.

Elon Musk promised to bring the release of Model 3 to the planned 5 thousand cars a week before the end of June. He said if such rates of the production were achieved and continued in the future, the company would be able to reach a profitable level in the third and fourth quarters.

 

The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade

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