Tesla shares fell nearly 10% to about $700 on Friday (June 3) after Musk ordered a global hiring freeze for executives on Thursday. Tesla had previously posted about 5,000 jobs on LinkedIn. In addition, 10% of the workforce on the payroll is to be laid off. The number of hourly employees, on the other hand, is to be increased. The layoffs do not include workers who actually build cars and batteries or install solar cells.
Musk said he was very concerned about the outlook for global economic growth and warned that he would have to lay off 10% of his workforce as the U.S. economy could fall into recession.
Tesla has already experienced a production halt at its Shanghai plant last month due to a shortage of auto parts and measures taken to control COVID-19.
Tesla shares also came under pressure when it was announced that sales in China, the world’s largest car market, fell 98% in April from March.
The decline in Tesla shares also dragged the market down. Apple Inc. shares fell 3.86% after Morgan Stanley noted that Apple’s App Store is showing signs of slower growth.
Chip stocks also put pressure on technology stocks. Micron fell 7.20% after Piper Sandler changed its investment recommendation for Micron, indicating pricing pressure and weak demand.