Tesla profits slump by more than a half

Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.

It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.

Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.

Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.

The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.

Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.

But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.

It did not reveal pricing details for the new vehicles.

However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”

“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.

Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”

Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.

However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.

It also said its situation was not unique.

“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.

Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.

Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.

The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.

However, Mr Musk sought to downplay the move.

“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.

Another 285 jobs will be lost in New York.

Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.

Musk’s salary

The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.

On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.

The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.

Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.

In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.

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Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.

The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.

Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.

The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.

Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.

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MONTREAL — Gildan Activewear Inc. is making changes to its board of directors in an attempt to head off a move by an activist shareholder looking to replace a majority of the board at its annual meeting next month.

U.S. investment firm Browning West wants to replace eight of Gildan’s 12 directors with its own nominees in a move to bring back founder Glenn Chamandy as chief executive.

Gildan, which announced late last year that Chamandy would be replaced by Vince Tyra, said Monday it will replace five members of its board of directors ahead of its annual meeting set for May 28.

It also says current board members Luc Jobin and Chris Shackelton will not run for re-election and that it will recommend shareholders vote for Karen Stuckey and J.P. Towner, who are two of Browning West’s eight nominees.

The new directors who will join the Gildan board on May 1 are Tim Hodgson, Lee Bird, Jane Craighead, Lynn Loewen and Les Viner. They will replace Donald Berg, Maryse Bertrand, Shirley Cunningham, Charles Herington and Craig Leavitt.

Hodgson, who served as chief executive of Goldman Sachs Canada from 2005 to 2010, is expected to replace Berg as chair.

“I look forward to working with this highly qualified board and management team to realize the full benefits of Vince’s ambitious yet realistic plan to drive growth by enhancing the Gildan sustainable growth strategy,” Hodgson said in a statement.

“The refreshed board and I fully believe in Vince and his talented team as well as Gildan’s leading market position and growth prospects.”

Gildan has been embroiled in controversy ever since it announced Chamandy was being replaced by Tyra.

The company has said Chamandy had no credible long-term strategy and had lost the board’s confidence. But several of Gildan’s investors have criticized the company for the move and called for his return.

Those investors include the company’s largest shareholder, Jarislowsky Fraser, as well as Browning West and Turtle Creek Asset Management.

In announcing the board changes, Gildan said it met with shareholders including those who Browning West has counted as supportive.

“Our slate strikes a balance between ensuring the board retains historical continuity during a period of transition and provides fresh perspectives to ensure it continues to serve its important oversight function on behalf of all shareholders,” the company said.

Gildan said last month that it has formed a special committee of independent directors to consider a “non-binding expression of interest” from an unnamed potential purchaser and contact other potential bidders.

But Browning West and Turtle Creek have said the current board cannot be trusted to oversee a sale of the company.

The company said Monday that there continues to be external interest in acquiring the company and the process is ongoing.

This report by The Canadian Press was first published April 22, 2024.

Companies in this story: (TSX:GIL)

The Canadian Press

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