Tesla stock falls nearly 8% after reports of ‘hardcore’ plan to slash costs

Shares of Tesla Inc. touched another multiyear low Friday, after a leaked memo spoke of the Silicon Valley car maker potentially running out of cash in just months without strict cost-control measures.

Tesla TSLA, -7.58%  stock fell 7.6% Friday to close at $211.03, its lowest close since Dec. 22, 2016. The stock was the second-worst performer on the Nasdaq 100 and monthly losses surged past 11%.

Related: Tesla’s ‘huge’ valuation is hard to justify, analysts say

Chief Executive Elon Musk reportedly has told employees that the company’s $2.2 billion cash reserve “is a lot of money, but actually only gives us about 10 months at the first-quarter burn rate to achieve breakeven,” according to a late Thursday report on Electrek, which cited an email from Musk.

Musk and Chief Financial Officer Zach Kirkhorn will reportedly approve all expenses, however small, as part of a cost-cutting plan meant to scrutinize all expenses, including salaries and travel costs.

See also: Tesla in fatal Florida crash had Autopilot on, NTSB says

Kirkhorn will review every payment page and Musk himself will review every tenth page, Electrek said. “This is hardcore, but it is the only way for Tesla to become financially sustainable,” Musk reportedly wrote.

Tesla tapped capital markets earlier this month. The company ended the first quarter with $2.2 billion in cash, $1.5 billion less than at the end of 2018, thanks in part to a $920 million convertible-bond payment in March.

The company last month reported a wider-than-expected first-quarter loss and sales were lower than expected. Tesla shares have lost 26% in the past 12 months and 37% year-to-date, versus gains of 5.1% and 14% for the S&P 500 index. SPX, -0.58%  

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