• TSLA stock is up 3% to $670 in Tuesday's premarket.
  • Musk announces plan to cut 3% to 3.5% of total headcount.
  • Tesla being sued for recent mass layoffs in US.

Tesla (TSLA) CEO Elon Musk announced at the Qatar Economic Forum on Tuesday morning that his market-leading EV manufacturer was planning to lay off as much as 3.5% of its workforce immediately, including 10% of salaried workers. This is actually a reduction in scope by Musk, who said earlier in June that he had a "super bad feeling" about the economy not long after JPMorgan CEO Jamie Dimon said a "hurricane" was on its way toward the US economy. At that time an internal memo from Musk called for a 10% reduction in headcount. TSLA stock is up 3% to $670 in Tuesday's premarket on the news.

FXStreet recently released a price target on Tesla: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Tesla Stock News: Layoffs appear short-lived

At the Qatar forum in an interview with Bloomberg's News' Editor-in-Chief John Micklethwait, Elon Musk said the 10% of job cuts were meant only for salaried workers, as opposed to hourly manufacturing workers, because the salaried workforce had grown too quickly.

“A year from now, I think our headcount will be higher," Musk added.

Tesla, headquartered in Austin, Texas, now has around 100,000 employees, so this would mean that approximately 3,000 to 4,000 employees would be terminated overall. The company is already facing lawsuits for terminating 500 employees at its Nevada gigafactory earlier this month. Two employees, John Lynch and Daxton Hartsfield, have brought suit, arguing that Musk's company violated the 60-day notification period required for mass layoffs under the Worker Adjustment & Retraining Notification Act.

"It's pretty shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice," said attorney for the workers Shannon Liss-Riordan in an interview with Reuters. Musk downplayed the lawsuit when asked about it in Qatar, calling it "trivial".

It is uncertain how, if at all, these layoffs would affect overseas workers. Tesla's gigafactory in Shanghai has only just gotten back in gear with exports resuming in May. Tesla exported over 22,000 vehicles from its Chinese factory in May after covid lockdowns in March and April forced it to only export 60 units.

News from its factory outside Berlin is that the EV maker is being forced to raise salaries to attract talent from other automakers. Birgit Dietze, a representative for the IG Metall regional union, said that Tesla's hiring is behind schedule as it plans to hire 12,000 employees by the end of the year. This has forced Tesla to raise starting salaries by as much as 20% in order to reach hiring goals. Dietze said this will difference in pay between early hire and late hires will cause consternation at upcoming collective bargaining talks.

Tesla Stock Forecast: $700 is the barrier to beat

With TSLA shares rising as Elon Musk seeks to control costs, $620 remains the key support for now. Its strength comes from February 24's steep loss that held up there, but it also worked back in August 2021. Breaking through $700 turns this resistance level back into support and places TSLA stock back in neutral territory. The 20-day moving average sits nearby $700 and should also provide some resistance.

If Tesla stock fails to conquer $700, then shares will likely descend back to support at $620. From there, based on the descending lower trend line, TSLA is destined for either $600 or more likely $550. That last price held strong in March and May of 2021. It is important to remember that the 20-day is way below the 50-day moving average, and that means TSLA share price is definitely still in a downtrend. Do not expect it to end until Tesla breaks and holds $700 for at least a week.

Above $700 lies further resistance at $756. Breaking through the last swing high close of $775 and closing above it will spell a new bull market for the EV leader.

TSLA stock daily chart

Tesla stock daily chart


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