A Tesla supercharger is shown at a charging station in Santa Clarita, California, U.S. October 2, 2019.
Mike Blake | Reuters
Tesla shares were down over 1% in premarket trade Monday on media reports that the automaker will lay off more than 10% of its global workforce.
The company’s stock was down 1.2% in premarket deals at roughly 7:30 a.m. ET.
“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Tesla CEO Elon Musk said in an internal memo cited by Reuters, which tech publication Electrek referenced in the first report of the layoffs.
“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” the memo said.
CNBC was unable to independently verify the memo and has reached out for comment.
Tesla had 140,473 employees as of December 2023.
Tesla shares have taken a bruising in recent months, down 31% in the year-to-date amid waning demand for electric vehicles and stiffening competition from Chinese automakers. Foreshadowing layoffs, the company earlier this month reported its first annual decline in vehicle deliveries since 2020, when the Covid-19 pandemic disrupted production extraneous of demand — first-quarter deliveries fell by 8.5% on the year to 386,810 in the first quarter, with output down 1.7% from a year earlier and 12.5% sequentially.
Deliveries serve as an approximation of Tesla sales but are not precisely defined in the company’s shareholder communications.
Since then, the firm has also resorted to trimming the subscription price of its premium driver assistance system, the Full Self-Driving package, for U.S. customers — in a move sharply at odds with Musk’s previous pledges that the FSD fee would only bulk up as Tesla bolsters the system’s features and functionality.
Following a long period of waiting, “the IPO market’s back.”
That’s according to Colin Stewart, Morgan Stanley’s global head of technology equity capital markets. In an interview with CNBC’s “TechCheck” on Monday, Stewart said 10 to 15 more tech companies could go public before the end of 2024, with an even “better year” in store for 2025.
“It’s been a long two and a half years, where we’ve had really nothing,” Stewart said. Recent initial public offerings have priced high and traded well, which “bodes well for the future,” he added.
The lull began in 2022, when soaring inflation and rising interest rates pushed investors out of risk, slashed tech valuations and led many tech companies to delay their plans to go public. It was a sharp contrast to the prior two years, which saw a record number of deals, including some at astronomical revenue multiples.
The IPO market cracked open in September, with the debuts of Instacart and Klaviyo. But the first real signs of momentum came last month, as Reddit became the first IPO for a major social media company since Pinterest in 2019 and data center connectivity chip company Astera Labsrocketed on its first day of trading.
Both stocks remain well above their IPO price, with Astera up about 145% as investors pour money into all things tied to artificial intelligence.
Morgan Stanley was the lead banker on the Reddit and Astera IPOs, positioning itself to collect roughly $37 million in total fees.
Wall Street rival Goldman Sachs led the latest venture-backed tech IPO last week. Rubrik, which develops data management software, jumped 16% in its New York Stock Exchange debut.
Bipul Sinha, CEO, Chairman & Co-Founder of Rubrik Inc., the Microsoft backed cybersecurity software startup, waves a flag while posing with employees during the company’s IPO at the New York Stock Exchange (NYSE) in New York City, U.S., April 25, 2024.
Brendan Mcdermid | Reuters
Stewart, who’s had a hand in some of the largest offerings of the last few decades, said it usually takes six months to take an IPO to the finish line. That means companies currently considering an IPO are likely to hold off until 2025 to avoid intersecting with the U.S. presidential election in November, he said.
As for valuations, Stewart said the market has retreated from the peak days of 2021, and multiples in software and other parts of technology are now back to levels seen in 2018 and 2019. Stewart described 2021 as an “amazing year” but also “exhausting.”
“What’s happened in the last six to 12 months is that the market has gotten more comfortable with paying for growth again,” Stewart said. “We’re not back to the levels of 2021, but we are getting a fair price for growth. And I think at those prices, you’re starting to see companies say, ‘You know, it’s actually not bad to be a public company.'”
Still, the most valuable, late-stage companies have yet to hit the exits. That list includes Elon Musk’s SpaceX along with Stripe and Databricks.
While Stewart said he’d “love to take them public,” he acknowledged that the challenge for the bigger names is “they’ve got scale, they’ve got growth, investors are giving them lots of capital” and they’re investing toward the future.
“Right now the IPO is not on their near-term horizon, unfortunately,” he said. “But when it does come they’ll be blockbuster.”
Companies such as Getir and Gorillas promise to deliver items to shoppers’ doors in as little as 10 minutes.
Angel Garcia | Bloomberg via Getty Images
Grocery delivery startup Getir announced on Monday that it is quitting international markets including the U.K., Germany, the Netherlands and the U.S., marking a major setback for the once hyped online grocery industry.
The Istanbul, Turkey-based firm said in a statement that it was withdrawing from its U.S. and European markets and would now refocus its financial resources on Turkey.
The company said it raised a new investment round led by Abu Dhabi sovereign wealth fund Mubadala and venture capital firm G Squared “to bolster its competitive position in its core food and grocery delivery businesses in Turkey.”
Getir said it generates 7% of its revenues from the U.K., Germany, the Netherlands and the U.S.
“Getir expresses its sincere appreciation for the dedication and hard work of all its employees in the UK, Germany, the Netherlands, and the U.S.,” the company said.
Pandemic grocery hype fades
Getir was one of the most-hyped online grocery delivery companies at the height of the Covid-19 pandemic in 2020 and 2021, when people around the world flocked to online services for their shopping purchases.
The company, which was founded in 2015, has raised a whopping $1.8 billion to date. Getir raised $768 million of that sum in 2022, at a sky-high valuation of $11.8 billion.
Getir’s valuation has since sunk considerably, with the company having reportedly seen billions of dollars wiped off its market value.
Getir raised funds from key backers including Mubadala, G Squared and ex-Sequoia Capital partner Michael Moritz, at a $2.5 billion valuation, according to a September 2023 Financial Times report, citing unnamed sources familiar with the matter.
That would mark a hefty 79% discount to Getir’s previously disclosed valuation. CNBC was unable to independently verify the FT report.
Struggling space
Getir’s bright purple and yellow branding had become a common sight on mopeds whizzing around the city to deliver groceries on demand in bustling cities such as London and New York.
Getir’s business, and others like it, rely on a model where groceries are packed at local so-called “dark stores” peppered about a major city in spots that are close to areas with a dense urban population.
Groceries would be packed up by staff at Getir’s stores and then delivered by its fleet of drivers in a matter of minutes. Getir touted delivery times of as little as 10 minutes.
Gorillas, another grocery delivery company with a model similar to Getir’s, faced financial struggles in 2022 when high interest rates and soaring inflation put pressure on its business. The brand was acquired by Getir in December 2022 for $1.2 billion.
SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer Award 2020 on Dec. 1, 2020 in Berlin, Germany.
Britta Pedersen | Getty Images
Shares of Tesla rose sharply in U.S. premarket trading on Monday after the electric car maker passes a significant milestone to roll out its full self-driving technology in China.
The company’s share price spiked more than 10% just after 7:30 a.m. ET, as investors reacted to news surrounding Tesla CEO Elon Musk’s visit to China.
Tesla on Sunday said that local Chinese authorities removed restrictions on its cars after passing the country’s data security requirements.
The move raised expectations that Tesla’s driver-assistance software Full Self Driving (FSD) would soon be available in the country, which is the largest market for electric vehicles.
FSD is an upgrade to Tesla’s Autopilot driver assistant. Tesla has offered its FSD technology in China for years, but with a restricted feature set that limits it to operations, such as automated lane changing.
Data security concerns have been a key obstacle preventing Tesla from achieving a full rollout of the system in China.
Tesla also reportedly scored a deal with Baidu that would give Musk’s firm access to the Chinese internet giant’s mapping and navigation technology for Tesla’s FSD feature.
The agreement would allow Tesla to tap into Baidu’s mapping service license, which is a requirement for intelligence driving systems to operate on public roads in China, Reuters reported, citing two anonymous sources familiar with the matter.
CNBC was unable to independently verify the report. Tesla and Baidu were not immediately available for comment.
With the license, which foreign companies can only clinch in partnership with local Chinese firms, Tesla will be allowed to legally operate FSD on Chinese roads, and its fleets will be able to gather data about traffic, road signs and routes.
The breakthrough for Tesla toward bringing its FSD self-driving technology to China marks a key win for the firm at a time when it is facing hefty competition in the Chinese market. Local rivals such as Warren Buffett-backed electric vehicle maker BYD, Nio, and Xpeng have ramped up their competition with Tesla in recent years.