What happened
Have you ever seen a stock double in just 5 days? TuSimple Holdings (TSP) pulled off the feat this week, gaining a jaw-dropping 104.8% by 2 p.m. ET Friday, according to data provided by S&P Global Market Intelligence. A lot of drama unfolded over the past few days, and market participants are missing no chance to buy the once-promising autonomous driving stock while it's still a penny stock.
So what
Two things fueled a buying frenzy in TuSimple stock this week: The stock dodged a delisting, and the company announced a restructuring plan.
Companies that don't comply with the rules of the stock exchanges face the threat of getting their stock delisted from the exchange. In TuSimple's case, the company still hasn't filed its financial report in Form 10-Q for the quarter that ended Sept. 30, 2022, nor has it filed its annual report in Form 10-K for the year that ended Dec. 31.
TuSimple received multiple notices and additional time from Nasdaq to file the reports. On May 11, though, Nasdaq denied the company's request for continued listing and said the stock will be suspended from trading from May 15 onwards. TuSimple stock plunged after the update.
Much to the market's surprise though, the stock continued to trade on May 15 and thereafter. In the absence of any updates from the company, the markets guessed that TuSimple must have appealed to the Nasdaq Hearings Panel and requested a stay on the suspension of trading.
That's exactly what happened. On May 18, TuSimple said while it was still unable to file the reports on time, it intended to present its views before the Nasdaq Hearings Panel on June 22.
Long story short, TuSimple stock has averted delisting until June 22 for now. With the company also appointing a new auditor, there's hope that it'll be able to file the regulatory reports soon, leave this saga behind, and refocus on its business instead.
Wait. There's another, and perhaps an even bigger, reason why TuSimple stock skyrocketed.
Now what
TuSimple already wants to convince investors that, despite everything that's happening, it hasn't lost sight of its business. So this week, TuSimple said it will lay off 30% of its workforce in the U.S. While that'll cost the company $12 million to $13 million in a one-time charge, the move could also save it up to $68 million on its annual cash-compensation expenses. TuSimple had already announced a 25% reduction in its workforce in December.
TuSimple also said it will no longer divest its Asia-Pacific operations as it continues to develop fully autonomous driving solutions for commercial freight trucks in the region.
So should you buy TuSimple stock now? Not so fast, as I strongly believe speculators -- and not investors -- drove TuSimple to dizzying heights this week. Layoffs aren't a great sign, and TuSimple's sudden decision on Asia-Pacific requires an explanation since the company was exploring options for the business for more than a year now.
Above all, TuSimple's CEO Cheng Lu is the same person who was first ousted early last year and then brought back in November to put the company "back on track." Seven months later, TuSimple is anything but on track.
