Shares of General Motors Corp. and Ford Motor Co. fell sharply on Monday as investors considered the ramifications of last week's federal bailout of the auto industry.

Buckingham Research analyst Joseph Amaturo said the $17.4 billion loan program approved by the White House is likely to diminish the value of GM stock in the long term. He reiterated his "Underperform" rating and $1 price target on GM. The price target implies an expected 78 percent drop in value for GM's Friday close of $4.49.

The loans give automakers GM and Chrysler LLC three months to develop plans to restructure into viable companies - a process likely to dilute GM's stock as the government takes an equity stake and boosts the pool of outstanding shares, Amaturo said.

Separately, Credit Suisse auto analyst Chris Ceraso cut his rating on GM to "Underperform" from "Neutral," saying the restructuring demanded of GM "will require the complete and/or near-complete elimination of existing GM equity."

The bailout, announced by the White House on Friday, requires GM and Chrysler to achieve "viability" by March 31. The loans may be called back if the government determines the automakers haven't meet that goal. Shares of GM plunged 77 cents, or 17.2 percent, to $3.72 in early afternoon trade.

Ford did not lobby for government help, saying it has access to enough cash to survive the auto industry downturn. Still, its shares lost 35 cents or 11.9 percent, to $2.60.

U.S.-traded shares of foreign automakers also declined. Toyota Motor Corp. said Monday it expected to post its first operating loss since it began releasing such reports in 1941, citing the crumbling automobile market. Shares of Toyota lost $3.27, or 5.2 percent, to $61.11.

Nissan Motor Co. shares fell 3 cents to $6.53. Daimler AG shares gave up $1.17, or 3.3 percent, to $34.50. Bucking the trend, Honda Motor Co. shares rose 20 cents to $20.53.

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