SAN FRANCISCO -- Tesla's stock and bonds tumbled on Monday as investors worried about the automaker's cash burn, sales outlook and problems with an Autopilot system that CEO Elon Musk has held out as key to the electric carmaker's future.
Tesla shares fell 2.7 percent, or $5.67, to close at $205.36 in trading Monday. The shares traded Monday as low as $195.25, a 7 percent decline that pushed the stock down to its lowest intraday level since December 2016.
Overall, the stock has declined 11 percent since the National Transportation Safety Board said on Thursday that the Autopilot system was engaged during a fatal collision of a Model 3 on March 1, in at least the third deadly U.S. crash reported involving the driver-assistance system.
Investors were also spooked after Musk told employees on Thursday he would increase cost-cutting and that $2.7 billion in recently raised capital would give Tesla just 10 months to break even at the rate it burned cash in the first quarter.
"We believe that the NTSB report could cast doubt on TSLA's self-driving capabilities, which have been highly touted by Mr. Musk," Needham analyst Rajvindra Gill wrote in a note to clients on Monday.
The shares have dropped in nine of the last 10 trading days, a stretch that started the day Tesla closed offerings of new stock and convertible bonds to shore up its balance sheet. In that span, Tesla stock has plunged more than 20 percent. The buyers of the stock in that offering, including institutional investors and Musk, are now down over $150 million on their investment.
Adding pressure on Tesla's stock, Wedbush analyst Daniel Ives on Sunday cut his price target for Tesla shares to $230 from $275, while maintaining his neutral rating. Ives, once among the most bullish analysts covering Tesla, wrote in a client note that he had "major concerns" about the company's growth prospects, underlying demand for the Model 3 in the U.S., and path toward profitability.
Musk, 47, recently told employees in an email that he and CFO Zachary Kirkhorn will personally scrutinize expenditures following a worse-than-expected first-quarter loss. After having to pay off a $920 million convertible bond with cash in March, another $566 million is due in November.
When drumming up interest for the stock and debt offering this month, Musk pitched investors on a future of autonomous robotaxis as the key to Tesla becoming a $500 billion company. Its market capitalization is now $36.4 billion, trailing General Motors Co. and Ford Motor Co.
If Tesla is unable to earn a profit in the second half of the year, the company may need to raise another $1 billion to $2 billion of capital, Ives said in an interview with Bloomberg Television.
“With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure,” Ives wrote in his report.
Tesla's $1.84 billion convertible bond due in 2024 was priced at 92.8 cents on the dollar, a low since it was issued earlier this month. Its $977.5 million 2022 convertible bond was also at an all-time low, trading at 96.46 cents on the dollar, down from 125.68 cents in January. Its $1.8 billion junk bond was trading at a five-month low of 84.25 cents on the dollar.
The NTSB's preliminary report on the crash in Delray Beach, Florida, has renewed doubts about the safety of Tesla's driver assistance technology and its ability to make its cars fully autonomous.
On April 22, Musk told investors that driverless Tesla "robotaxis" would be available in some U.S. markets next year, a claim met by skepticism by some self-driving experts.
Musk is battling to convince investors that demand for the Model 3, the sedan targeted to propel Tesla to sustainable profit, remains high, and that it can be delivered efficiently and swiftly to customers around the world. Tesla lost $702 million in the first quarter and warned that profit would be delayed until the latter half of the year.
With Tesla's stock down 39% year to date, 10 analysts recommend buying the shares, while another nine are neutral and 12 recommend selling, according to Refinitiv. The analysts' median price target is $250, down from $300 a month ago.