Tesla Shares Sink as Musk Jokes About Bankruptcy

Mony
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Tesla. CEO Elon Musk likes to have fun on Twitter, including over the weekend when he joked the company had gone bankrupt.

Tesla
Inc.


TSLA -5.17%

shares sank more than 7% Monday, suggesting investors were in no laughing mood over Chief Executive

Elon Musk’s

bankruptcy jokes as the electric-vehicle maker grapples with the aftermath of a fatal crash and prepares this week to release production results.

The drop to $248 a share in early trading extended a selloff that has lopped off 36% from the stock since its peak in September.

Mr. Musk delivered his April Fools’ tweet (“Tesla Goes Bankrupt”), in which he joked Tesla failed to raise enough cash in a last-ditch Easter Egg sale, at a time when his company’s cash position is under real scrutiny. Last week, Moody’s Investors Service downgraded Tesla’s credit rating and cautioned about the company’s outlook, citing concerns about cash levels.

Cash worries are nothing new for Tesla, but the stakes have grown as it has taken on more than $10 billion in debt. Mr. Musk avoided bankruptcy in 2008, which he often talks about publicly.

Tesla’s report on first-quarter production results this week will provide insight into whether the car maker is on track to reach its target of making 5,000 Model 3 sedans a week by the end of June, a goal it already postponed twice.

The Model 3 sedan, which began assembly in July, was supposed to help the company reach 500,000 units overall this year, about five times what it sold last year. Tesla’s target for the end of March was 2,500 Model 3s, a number the company likely missed, Philippe Houchois, an analyst for Jefferies, wrote in a research note Monday.

Mr. Musk’s April Fools’ Day tweet followed several tough days for Tesla. Since the market closed Thursday in New York, it announced what is believed to be its largest recall ever over a possibly defective bolt in the Model S. It also was dealt a rebuke from the National Transportation Safety Board after it publicly released information about a fatal crash involving its Autopilot system.

At about 3 p.m. Eastern Standard Time on Sunday, Mr. Musk laid the groundwork for his mischief with a tweet saying important news was coming.

“Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt, you can’t believe it,” Mr. Musk posted at around 6 p.m. Mr. Musk followed up with additional postings, including one of him holding a sign that reads “Bankwupt!”

Tesla spokesmen didn’t respond to a request for comment.

The Tesla CEO is a prolific user of

Twitter
.

He often engages his followers, takes questions about the business and, at times, lobbies President

Donald Trump

on political issues.

Mr. Musk wasn’t the only auto executive in an April Fools mood. Toyota Motor Corp.’s Lexus teamed up with 23andMe Inc. for a video about using DNA to customize cars. And

Porsche
AG

said it would make a 700-horse-power electric tractor that “will be the fastest accelerating agricultural vehicle in the world.”

Mr. Musk’s humor, though, stood apart. “I’ve never heard of a CEO” joking about bankruptcy, David Whiston, an analyst for Morningstar Research Services LLC, said in an email.

Tesla finished the fourth quarter with $3.4 billion in cash and in 2017 had a negative free cash flow of about $1 billion on average, driven largely by spending to bring out the new Model 3. Analysts expect it will need to raise more money later this year.

Write to Tim Higgins at Tim.Higgins@WSJ.com

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