Tesla Inc (NASDAQ:TSLA) shares are expected to bounce after chief executive Elon Musk made a U-turn on his plan to cut 10% of the electric carmaker's workforce.
In an email to Tesla employees last week, Musk said he planned to cut one in 10 of Tesla's 100,000 employees due to a "super bad feeling" about the economy, instructing executives to "pause all hiring worldwide".
As investors digested Musk's bearish take, shares of the company plunged 9.2% on Friday - the steepest drop in five weeks - and on Monday are trading up 3% to $727.75 in pre-market trading.
But over the weekend the CEO stated the company's total workforce will rise this year but the number of salaried staff is unlikely to significantly increase.
"Total headcount will increase, but salaried should be fairly flat," Musk tweeted in a reply to an unverified Twitter account that made a "prediction" that Tesla's headcount would increase over the next 12 months.
Last week Musk also told all Tesla employees they could no longer work remotely, that they must return to the office, and that they must spend at least 40 hours at work every week.
“Musk’s mixed message has created a lot of confusion,” said Daniel Ives, an analyst at New York-based Wedbush Securities, told Bloomberg on Monday.
“We believe Musk tried to send a signal to the employee base, it backfired, and now he has walked back his words.”
Some industry observers speculated that Musk made the announcement as a way to cut jobs, knowing that many workers wouldn't want to return to work, so Tesla could avoid having to sack them and provide them with redundancy packages.
Tesla's facilities are reported to have insufficient desk space and parking spaces to accommodate its entire workforce.
During Tesla's Model 3 debut in 2017, Musk described a "production hell" that led to about 700 layoffs, and in the following year, 9% of the company's employees were laid off as the firm struggled to ramp up production.
Tesla recorded US$18.7bn in revenue in its first quarter of this year despite supply chain challenges and factory shutdowns in China, even as it produced and delivered more than 305,000 vehicles.
Musk's target is to deliver up to 1.5mln vehicles this year, up from almost 1mln in 2021.