Tesla layoffs show delivery miss about demand, not supply, says JPMorgan

JPMorgan analyst Ryan Brinkman says Tesla’s announcement yesterday that it would conduct its largest ever layoffs, amounting to more than 10% of its global workforce, should “firmly dispel the notion” that the company’s big Q1 delivery miss was somehow supply-driven rather than reflective of a demand problem. The news “should now leave no doubt that the decline in deliveries has been a function of lower demand and not supply,” the analyst tells investors in a research note. Looking beyond Q1, JPMorgan says the retrenchment in employment and capacity has “far reaching implications for the hypergrowth narrative still embedded in Tesla’s share price, suggesting material downside risk for the stock.” It keeps an Underweight rating on Tesla with a $115 price target.