If $Tesla Motors(TSLA)$ does announce layoffs -- as rumored -- it's a slippery slope for the company.
So much of Tesla's value comes from (1) future growth/products that don't yet exist and (2) a talented, passionate, and loyal employee base.
Any Tesla bull will tell you, "Tesla gets 5 million job applications per year from the smartest people in the world." But talent wants upside...
On #1, it certainly looks like Tesla's demand is weaker than investors hoped and may be in decline for the foreseeable future. That doesn't bode well for margins, which are already falling, or future vehicles.
And if Tesla starts trading more like an auto stock (which it is), it should be valued 80%-90% lower than it is today and even that would be a premium to the P/S and P/E multiple of rivals.
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But the stock drop is where the this could get bad.
Tesla isn't the highest paying company for production workers, but it gives out stock, which has made workers a lot of money. If that stock is no longer appealing, the job is less appealing.
For those on the tech/design side, who may get RSUs or options, the stock decline would be even worse. Why work for a company with a falling stock price and declining profits when anyone in tech would pay you big $$$ to come to their company.
When a company like Tesla is on the rise it's like a gravitational force for talent and the rising stock price is a big part of the attraction, like it is at startups. But when that narrative turns out to be false, people start looking for other opportunities with more upside.
We will see what happens over the next few weeks, but keep this in mind if layoffs are announced. The shine can wear off companies and stocks quickly and I would be worried that Tesla could start a downward spiral if layoffs lead to a falling stock, which leads to talent exits.
Something to keep an eye on.
https://twitter.com/TravisHoium/status/1779711819373809848
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