It was reported this morning that Tesla (TSLA) "will lay off more than 10% of its global workforce, an internal memo seen by Reuters on Monday shows, as it grapples with falling sales and an intensifying price war for electric vehicles".
The market has so far reacted with strong selling of more than -3% in early trading. But is this really bad news?
Not so long ago (November 09 2022), another high tech giant that was heavily decimated at the time, Meta Platforms (META), announced lay offs of around 13% of the company (more than 11000 employees). This was just 5 days after the November 04 2022 market bottom. The result (chart on the right) was an aggressive recovery above the 1D MA50 (blue trend-line), which turned into a Support for 240 days straight.
Of course the fundamental difference is that the 2022 Low for Meta was the Bear Cycle bottom of the Inflation Crisis while Tesla's Channel Down has been the picture of its underperformance for almost a year relative to the rest of the market (and the Magnificent 7 in particular).
However it shouldn't be overlooked that such cost driven news are fundamentals capable of turning the profitability of a company around and Meta's case is such a representative example. Meta was massively oversold in November 2022 (-75% from ATH) and similarly Tesla is massively oversold now (-60% from ATH). Meta managed to completely recover and smash through to new All Time Highs (+38% from previous ATH). In November 2022 it was all doom and gloom for the social media giant and it is worth searching for news headlines at the time to see the similarities with Tesla's situation today.
Time will tell of course, but we wanted to bring this comparison to you and help you draw your own conclusions.
** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. **
The bottom of META is also when whole Nasdaq started the strong uptrend 14.000 -> 18500. The market trend is 'key-factor' also for individual stocks. I would not recommend the lay-off of TESLA as a buying signal ..
harley_roberts_hr
⋅
thank you
Chad_McDeid
⋅
very nice
NoahTi
⋅
Part of the reason why META eventually rallied was that the PE at the lows was under 10. TSLA has a much higher PE.
jens-wilson
⋅
Good analysis but Meta and Tesla are in two different industry. The demand for EV may only ignite when rates drop and with the FED holding rates high then there is very little luck for Tesla, also most American don't like EV because of range anxiety. The two factor will keep Tesla down for a while.
The market trend is 'key-factor' also for individual stocks.
I would not recommend the lay-off of TESLA as a buying signal ..