Why Tesla Stock Tumbled Today

Tesla (NASDAQ: TSLA) stock slid 3.3% through 12:50 p.m. ET Monday on disturbing news. First, Bloomberg reported today that CEO Elon Musk, who announced layoffs of 10% of Tesla's workforce last week, actually wanted to lay off 20% of the employees to match the sequential decline in Tesla's shipments between the fourth quarter of 2023 and the first quarter 2024.

Second, Piper Sandler says there's a good reason that shipments declined: Simply put, "Tesla's production capacity has outstripped demand."

Now, the fact that demand for electric cars has been slowing is not really news. Still, the contraction in demand for Teslas is shocking. The 386,810 EVs that Tesla shipped in Q1 represented a 20.1% sequential decline, and Piper notes this slack demand affected "essentially all [Tesla] models, in all global regions."

On the one hand, Tesla is cutting prices to spur demand and fix this problem. On the other hand, Piper says that Tesla cutting prices is a "clear indicator" that Tesla has a demand problem on its hands -- not a supply problem.

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Source Fool.com