Tesla's stock price dropped 9.22% to $703.55 on the close of 3 June 2022. This sharp drop was a reaction by investors to a Reuters report that Tesla planned to reduce its workforce by 10%. The investors panicked because they perceive that Tesla will face problems in their production and sales over the next few quarters.

Some analysts had been saying for years that Tesla's stock price is overvalued and has a high price earning ratio. 

I watched a video by Dave Lee, who is a blogger that is very familiar with Tesla. Click here to watch the video.

Dave said that the market had misinterpreted this latest news. Tesla's CEO Elon Musk plans to reduce the salaried staff by 10% (as their overheads are too high), but will increase the hourly rated factory workers that produces the vehicles in the gigafactories. Tesla continues to get large orders and are struggling to meet the demand. 

I agree with Dave Lee. 

I believe that the market had over-reacted and wrongly reacted to this news. I expect Tesla stock price to recover when the market opens next week. 

Indeed, they may realize that this move is good for Tesla, as they will be reducing their operating expenses and become a leaner operation. It may help to improve their profit margin.

I now hold 400 shares and intend to buy 200 shares at the current price. 

However, going forward, I expect Tesla's financial results for Q2 of 2022 to be disappointing.due to the recent lockdown in Shanghai (which has since been lifted) and the impairment of the holdings of bitcoin. So, my purchase will be a short term move.

This is speculative. 

Note - I am sharing my personal view. I am not giving investment advice. 

Tan Kin Lian