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Anticipating US downturn, Elon Musk details Tesla staff cuts

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© Reuters. FILE PHOTO: Elon Musk arrives at the In America: An Anthology of Fashion themed Met Gala at the Metropolitan Museum of Art in New York City, New York, U.S., May 2, 2022. REUTERS/Andrew Kelly

By Andrew Mills, Yousef Saba and Hyunjoo Jin

DOHA (Reuters) -Elon Musk, CEO of Tesla (NASDAQ:TSLA), said a 10% cut in salaried staff at the electric car maker will happen over three months, as the world’s richest man predicted a U.S. recession was more likely than not.

His remarks were his most detailed explanation of job cut plans and his first in-person appearance since Reuters reported https://www.reuters.com/technology/exclusive-musk-says-tesla-needs-cut-staff-by-10-pauses-all-hiring-2022-06-03 at the start of this month that the company needed to cut staff by about 10% and was pausing hiring worldwide.

Speaking at the Qatar Economic Forum organised by Bloomberg, Musk said the cuts would apply only to salaried workers, meaning a 3.5% reduction in total headcount, changes he described as “not super material”.

But he expressed concern about the prospect of a U.S. recession.

“It’s not a certainty, but it appears more likely than not,” he said.

Musk’s outlook echoes comments from executives, including JPMorgan Chase & Co (NYSE:JPM) CEO Jamie Dimon and Goldman Sachs (NYSE:GS) President John Waldron. A “hurricane is right out there down the road coming our way,” Dimon https://www.reuters.com/markets/us/fed-would-struggle-achieve-soft-landing-wells-fargo-ceo-warns-2022-06-01 said early this month.

Whether the United States will go into recession https://www.reuters.com/business/energy/biden-says-decision-pause-federal-gasoline-tax-could-come-by-end-week-2022-06-20 has been a growing concern for chief executives, the Federal Reserve, and the Biden administration.

U.S. President Joe Biden reiterated on Monday that he felt a U.S. recession was not inevitable, even as the world’s largest economy struggles to tackle soaring gasoline prices and inflation, which is at its highest in 40 years.

Former U.S. Treasury Secretary Lawrence Summers told NBC News on Sunday he expected a recession.

In an email on June 2, seen by Reuters, Musk told Tesla executives he had a “super bad feeling” about the economy and that the company needed to cut staff by about 10% and “pause all hiring worldwide”.

He said on Tuesday Tesla expected to increase the number of workers paid by the hour as opposed to on fixed salaries.

He also said he was sticking with digital currency and intended to personally support dogecoin.

Digital currency has been extremely volatile this year, but bitcoin surged following Tesla’s announcement in February last year that it had bought $1.5 billion of the currency and for a short time accepted it as payment for vehicles.

‘VERY SIGNIFICANT MATTER’ UNRESOLVED ON TWITTER DEAL

Elon Musk also spoke about his bid to buy Twitter (NYSE:TWTR), which Forbes magazine reported early this month he had agreed to buy for $44 billion.

Musk said there were unresolved issues, including the debt portion of the deal and the number of spam users.

“We’re still awaiting resolution on that matter, and that is a very significant matter,” he said, reiterating doubts over Twitter’s claims that false or spam accounts represented fewer than 5% of its monetisable daily active users.

“And then of course, there’s the question of, will the, the debt portion of the round come together? And then will the shareholders vote in favour?”

Musk said he would like to get 80% of North America and half the world on Twitter.

“My aspiration for Twitter is to be as inclusive as possible,” he said.

The most important thing was to take the company in the right direction, as at his private rocket company SpaceX and Tesla, he said.

“Whether I am CEO is much less important than my ability to drive the product in the right direction,” he said.

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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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