$8 billion wiped of Tesla’s value following shock announcement

Tesla’s abrupt announcement last week that it was to close most of its physical stores reportedly came as a surprise to most staff whose jobs are now under threat.

The announcement, which came in the form of a blog post from its chief executive Elon Musk, also spooked investors leading to a 13.55 per cent dive in its stock prices since Thursday, reducing its market capitalisation by up to $8 billion (£6 billion).

According to Bloomberg, Tesla’s sales staff were unaware of the dramatic changes to the company’s sales strategy, with many finding out about it as it was announced publicly.

READ MORE: Tesla to shut all of its physical store to drop price of Model 3 to $35,000

Though Musk is yet to give any solid figures on how many jobs the shift online will affect, he said in January he would have to shave around seven per cent of roles to stay afloat, adding in his statement last week that some jobs will be transitioned to other areas in the business.

The shift came as such a shock to investors as Tesla’s strategy until now has largely focused on expanding its physical store network, opening 27 new locations in the last quarter, bringing the total to 378 worldwide.

Nine days before the announcement, Tesla said in its annual report that physical retail was an important part of its strategy, stating: “…we have complemented our store strategy with sales facilities and personnel in service centers to more rapidly expand our retail footprint.”

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