Investing.com – Shares in Tesla sank 5% after Goldman Sachs downgraded the company on worries over the launch of its new Model 3 and concerns over cash flow.
Specifically, Goldman downgraded the company to sell from hold and cut its price target by $5 to $190.
“We expect to see pressure on shares as we progress through the year, as cash burn intensifies and the ramp of Model 3 volumes proves to be slower and flatter than assumed in guidance/consensus,” these experts said.
They also noted Tesla chief executive Elon Musk’s admission last week that the firm was likely to raise capital by the fourth quarter.
“We see room for shares to de-rate as the Model 3 production launch likely disappoints and as an unproven SolarCity business model likely weighs on the company’s focus/results,” these experts said.
They based their $185 price target on their estimation for 28% downside versus their 8% forecast for the auto sector overall.
At 10:29AM ET (15:29GMT), shares of Tesla Inc (NASDAQ:TSLA) sank 4.85% to $244.53.