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The Tesla bear camp on Wall Street swelled on Monday after analysts at Goldman Sachs downgraded the stock to sell, citing concerns over the execution of the automaker’s Model 3 vehicle, the company’s recent acquisition of SolarCity and the company’s cash needs.
Tesla shares slid 4 per cent in early trading to $246.72 after David Tamberrino, an analyst at Goldman, downgraded the company to “sell” from “neutral” and lowered the price target to $185 from $190.
Following Mr Tamberrino’s cut, Tesla now has eight “buy” ratings, nine “hold” ratings and seven “sell” ratings, according to Bloomberg data.
Despite the company’s claims that the mass market Model 3 remains on track Mr Tamberrino cited concerns abut the launch “as some suppliers have expressed concern around final designs not being locked down”. Tesla has previously been hamstrung by production constraints and was delayed by two years in launching its falcon-winged Model X vehicle.
Moreover, he cited concerns about the acquisition of SolarCity that was completed in November, saying it “increased the risk profile of Tesla amidst a business model transition” at SolarCity “and provides limited synergies”.
Finally, during the company’s earnings call last week Mr Musk indicated that Tesla could look for a cash infusion as it readies for the planned launch the Model 3 in what is being viewed as a make-or-break year, along with the massive battery plant dubbed the “gigafactory” and the integration of its Solar City acquisition.
“We forecast a significant increase in near-term capex levels required to bring both the Fremont, California factory and Tesla’s gigafactory to scale,” Mr Tamberrino said, adding that he anticipates another equity raise will be needed before the fourth quarter.
Tesla shares are up nearly 16 per cent so far this year.