(Reuters) - Shares of Tesla Inc TSLA.O sank 14% on Thursday and its bonds traded lower, a day after the electric carmaker said it needed more time to turn a profit, reported lower margins and announced the departure of a key executive.

Investors knocked more than $6 billion off Tesla’s market value in response to the company’s second-quarter results.

Only two Wall Street brokerages reduced their existing share price target for the company, but a batch of downbeat research notes from analysts focused on shrinking margins, a key challenge in delivering profit going forward.

Tesla’s automotive gross margins dropped in the quarter to 19% from 20%.

Elon Musk on Wednesday said Tesla now aims to be profitable in the fourth quarter, with the current quarter to be break-even. The company said it was focusing less on profit and more on volume growth, capacity expansion and cash generation.

That contrasted with the billionaire CEO’s promise this time last year that the company would be profitable and cash flow positive “henceforth”.

“Another example of the goal posts being moved,” JP Morgan analyst Ryan Brinkman wrote.

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The stock was down 14% at $227 in mid-day trading on Nasdaq.

BONDS UNDER PRESSURE

The eurobond portion US166858275= of Tesla's $1.8 billion junk bond was down 2 points in price in brisk trading, pushing its yield back above 8% for the first time since July 1. Its yield spread over Treasuries, a measure of the added risk investors take for owning Tesla's speculative-grade rated bond rather than safer U.S. government securities, widened by more than 40 basis points.

In all, it was the bond’s biggest loss since early last September when its chief accounting officer quit after just a month on the job and Musk was filmed smoking marijuana and wielding a sword on a webcast.

“I would have guessed that (the bonds) would have moved a little more than they have,” said Tom Graff, portfolio manager, head of fixed income, Brown Advisory. “I think any kind of core thesis about how this company has a sustainable path forward is pretty challenged now. My read on what’s left over for bond holders is not 90 cents on the dollar – it is less than that. I don’t think it should price like a bankruptcy is imminent, it just feels like more than a (two-point move).”

Newer debt securities from Tesla were also under severe pressure. The $1.84 billion convertible note 88160RAG6= it issued in early May fell 8 points, the most since it hit the market just over two months ago. It had closed at a record high on Wednesday.

Several analysts were also concerned by the resignation of chief technology officer and pioneer of the company’s electric batteries, J.B. Straubel, the last of the company’s old guard left in its top echelons outside Musk himself.

“Straubel has been at the forefront of the company’s technology leadership, which we believe will increasingly be called into question as competitors catch up,” Cowen analysts said.