Amid another weak day in the U.S. equities sector on Monday, autonomous truck-driving systems provider TuSimple Holdings Inc (US:TSP) moved against the grain, closing up 3.25% against the prior session. Over the past weekend, The Wall Street Journal broke the news that the embattled enterprise plans to lay off at least half its workforce later this week.
Nominally, the cuts will affect at least 700 employees and per the WSJ’s source, the headcount reduction could go even deeper. As of June of this year, TuSimple had 1,430 full-time employees under its global payroll. In addition to its headquartered city of San Diego, California, the autonomous driving systems specialist features operations in Arizona, Texas and China.
As part of the downsizing, wrote the WSJ’s Heather Somerville, “much of TuSimple’s operation in Tucson, Ariz., where it does a lot of its test driving, will be eliminated, and the team that works on the algorithms for the self-driving software will be pared back significantly, the [source of the layoff announcement] said.”
This latest development compounds earlier troubles that severely hurt TSP stock. As Fintel’s Greg Morcroft stated, a filing with the U.S. Securities and Exchange Commission in late October revealed TuSimple’s board determined “that the company did share confidential data with Chinese trucking startup Hydron without the board’s knowledge.”
At the time, TSP stock fell 47% as regulators began probing if co-founder and then-CEO Xiaodi Hou “violated fiduciary duties and securities laws when he failed to disclose information about Hydron.”
Following Hou’s dismissal, he teamed up with fellow co-founder Mo Chen – who also leads Hydron – to fire the board, according to another WSJ report. In November, accounting firm KPMG LLP stated in a letter to the SEC that it resigned as TuSimple’s auditor because of the board firing. Per the WSJ, the termination of the board involved dismissing TuSimple’s audit committee.
Weighing on TSP stock is that the underlying company suffers from concurrent federal investigations. In a WSJ exclusive published in August of this year, an autonomously operated truck integrated with TuSimple’s technology veered off lane on the I-10 highway in Tucson, Arizona, eventually slamming into a concrete barricade. The incident occurred a few months prior to the publication date on April 6.
The Federal Motor Carrier Safety Administration – an agency under the Department of Transportation – launched a safety compliance investigation regarding TuSimple’s accident. An internal company document assigns blame on the driver-engineer team that operated the truck in question. Specifically, TuSimple alleges that one of the parties failed to properly reboot the autonomous driving system before engaging it, causing the system to execute an undesired command.
However, researchers at Carnegie Mellon University concluded that the autonomous driving system erroneously turned the wheel, causing the accident. Further, they stated that TuSimple’s explanation of human error was misleading.
Despite Monday’s heroics, TSP stock still slipped slightly over 21% in the trailing five sessions. Additionally, on a year-to-date basis, shares hemorrhaged 95.63% of equity value.
This article originally appeared on Fintel
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