Tesla, Inc. (NASDAQ:TSLA) shares fell more than 4 percent on Monday after Goldman Sachs downgrade the stock to sell, citing that issues like too accelerating cash burn and possible delay of delivering Model 3 may harm the company.
Goldman Sachs analyst David Tamberrino downgraded the stock to sell from hold and cut its price target to $185 from $190. This represents a 28 percent downside from Tesla’s closed price of $257 on Feb. 24.
"While we believe Tesla currently has a lead relative to OEM (original-equipment market) peers with respect to vehicle technology adoption, electric vehicle architecture, and (potentially) battery scale, our concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs," Tamberrino wrote in a note.
Goldman’s move sent Tesla’s share down as much as 4.83 percent to $244.52 in the early trading. The stock fell 5.6 percent last week after the company reported fourth-quarter earnings results that topped analysts’ expectations. The stock had gained 14 percent this year.
Tesla had a history of not meeting its production targets, which has been questioned by analysts for a long time. Tamberrino doubted Tesla’s ability to delivery Model 3 on time despite Tesla’s management reiterated that it was on schedule for production in July during the earnings last week. He also indicated that Tesla is likely to raise more capital for its production before fourth quarter 2017.
"Ultimately we see a delayed launch," Tamberrino said.