Reply To: Tesla Delivers Record Earnings Despite Global Supply Chain Headwinds


Tesla (TSLA (721.52 -53.48) after Mr. Musk’s comments about the economy.

After a Reuters report was released stating that CEO Elon Musk has a “super bad feeling” about the economy and that TSLA will cut about 10% of its jobs.

The declaration comes on the heels of a warning of a looming “economic hurricane” from JPMorgan Chase (JPM) CEO Jamie Dimon, was made in an email to other corporate executives.

Musk’s ominous outlook also reminds us of an email that Uber (UBER) CEO Dara Khosrowshahi sent to his employees in early May. In that email, he described a “seismic shift” underway in the market that prompted him to scale back on UBER’s hiring plans while ramping up cost-cutting efforts.

hould the economy enter a downturn, it could be the blow that finally breaks TSLA’s seemingly unstoppable momentum. Until now, the leading EV maker has managed to weather a major supply chain storm and runaway raw materials inflation, generating impressive results over the past several quarters. In Q1, the company crushed EPS and revenue estimates, fueled by a 69% jump in production and a surge of 636 bps yr/yr in automotive gross margin to 32.9%. Underlying these remarkable results is a red-hot market for EVs, which hit another gear this spring as gas prices soared throughout the country.

With economic risks and uncertainties on the rise, that strong demand and consumers’ willingness to absorb TSLA’s recent price hikes may subside. During economic downturns, consumers tend to hang onto their current vehicles longer, looking to squeeze as much mileage out of them as possible. This works in the favor of auto part retailers such as AutoZone (AZO), O’Reilly Automotive (ORLY), and Advance Auto Parts (AAP).