Tesla CEO Elon Musk is having a difficult year.
After an announcement on April 15 that Tesla (TSLA) would cut 10% of its global workforce, which could total more than 14,000 employees, the once-darling of the electric-vehicle movement is falling further from its once-impressive heights.
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This news comes after several other troubling developments from Tesla in the past few months: a dropping share price, a weaker-than-expected first-quarter update, a warning that full-year delivery totals would be "notably lower" than 2023, and overall 2024 deliveries down by 20% from Q4 2023.
Wedbush Securities analyst Dan Ives talked about the changes in a note to investors and in a recent interview with Australian Broadcast Corp., calling Tesla's current situation "dark days."
"The 10% reduction is a large one, and to me it looks like an ominous sign for what looks like some tough days ahead," Ives said.
When asked why demand was slowing, Ives said that it was "a perfect storm in a negative way from a demand perspective.
"China has been a disaster for Tesla, and that's been the key part of their growth strategy. There's also a massive price war that's happening, and then you have competition from all angles globally.
"At the same time, demand softened in EVs. After a Cinderella ride for Tesla the last few years, it's been a bit of a horror show the last six months and, I think, it just shows they continue to have massive issues from a demand perspective."
Asked about the reports that Tesla was scrapping the oft-touted budget Model 2, Ives said going through with the cut would be a "train wreck."
"I think Tesla's just massively miscalculated the importance of this," Ives said, referring to investor patience as "wearing very, very thin."
Another concern Ives mentions in his investor note regards former Tesla execs Drew Baglino and Rohan Patel.
Baglino spent 18 years with the company, most recently as the senior vice president of powertrain and energy engineering, before his April 2024 resignation. Patel, vice president for public policy and business development, also resigned mid-April.
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"Baglino is an absolute gut punch loss in our view as he was instrumental in the powertrain and energy initiatives at Tesla and was viewed by many as key to the Model 2 initiative over the next few years," Ives wrote. "The pressure on the stock today is being exacerbated by the Baglino news, which was very unexpected."
Ives also made clear that Wall Street "NEEDS answers on next week's Tesla Q1 conference call."
"We need to hear the rationale for the cost cutting, the strategy going forward, product roadmap, and an overall vision from Musk. Otherwise many investors might head for the elevators during this Category 5 perfect storm of weak demand Tesla is seeing globally in 2024," Ives wrote.
Through the concerns he lays out, Ives still carries an outperform rating and $300 price target on Tesla stock. His target is almost twice recent trades above $158.
