Shares of Tesla (NASDAQ: TSLA) spiked Tuesday after CEO Elon Musk clarified some comments he made earlier this month about upcoming layoffs at the electric vehicle company.
The EV stock was up by 11.5% as of 1:01 p.m. ET.
Earlier this month, Reuters reported that Tesla would lay off 10% of its salaried employees, citing an email written by Musk to employees. In the email, Musk said that he had a “super bad feeling” about the economy. He also made it clear that those planned cuts did not include workers directly involved in building Tesla’s products.
But on Tuesday, Musk further clarified his comments in an interview with Bloomberg, saying that while Tesla will reduce its salaried staff by 10% over the next three months or so, it will also continue to hire hourly workers. Musk said the combination of layoffs and hiring will result in just a 3.5% net reduction of Tesla’s workforce.
Musk said that reduction would not be “not super material” and predicdted that in a year, the company will have more total employees than it has now.
Investors were apparently happy to hear that the company isn’t reducing its overall headcount as much as originally expected.
Despite Tesla’s share price pop Tuesday, the stock is down 31% year to date. And while it’s good to see the EV stock make gains, investors may want to prepare for more share price swings ahead as investors process high inflation, Federal Reserve interest rate hikes, and a market that is nervous about a potential slowdown in the economy.
That doesn’t mean Tesla isn’t still a good long-term investment, it just means that shareholders could still experience more volatility in the near term.