Wall Street bullish on Tesla as job cuts signal ‘productivity gains’

A Tesla Model 3 is seen in the general assembly line at the Tesla factory in Fremont, California, on Thursday, July 26, 2018.

Mason Trinca | The Washington Post | Getty Images

A Tesla Model 3 is seen in the general assembly line at the Tesla factory in Fremont, California, on Thursday, July 26, 2018.

Job cuts at Tesla is not quite the bad news investors are interpreting it to be, analysts at Jefferies and Oppenheimer said on Friday.

“Reducing headcount also suggests productivity gains,” Jefferies analyst Philippe Houchois. “This is, in our view, consistent with slower growth rates but mostly the scope to improve productivity and flow that we identified during our visit to the Fremont plant mid November 2018.”

CEO Elon Musk announced Tesla announced Friday the automaker is cutting its full-time staff headcount by approximately 7 percent.

“It’s not a huge surprise to see this,” Oppenheimer senior research analyst Colin Rusch said on CNBC’s “Squawk Box.”

Tesla fell 6.8 percent in premarket trading from Thursday’s close of $347.31 a share. Jefferies has a $450 price target on the stock.

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