Tesla stock is down more than 5% on Monday after Goldman Sachs downgraded its rating and dropped its price target on the EV firm from $190 to $185. The analysts said they see three concerns with the electric car maker: cash needs, Model 3 execution, and an unproven solar business (referring to the recent SolarCity acquisition).

Tesla
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Analyst does not agree with Musk

In a note to clients on Monday,  analyst David Tamberrino noted, “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.”

The investment firm expects Tesla’s affordable electric car, the Model 3, to arrive late and predicts that the EV firm will have to go to the market to raise capital by the end of 2017.

“Ultimately we see a delayed launch (pushing volume growth out and to the right) and FCF burn rate (necessitating a capital raise before 4Q17) to weigh on TSLA’s shares,” the analyst said.

Tamberrino, like many other Wall Street analysts, based his views on the expectation that the Model 3 will be late getting to market. However, CEO Elon Musk and other management recently told investors that the Model 3 is on track for the production in July and nearly 5,000 units per week by the end of the year.

Is the rally over for Tesla?

Since December 2, Tesla shares have gained 42%, compared to the 8% gain by the S&P 500’s, and 9% gain for the auto market. Tesla’s stock was primarily driven by positive news, including the Gigafactory investor tour, which impressed analysts, and tax reform proposals.

Tesla’s stock was approaching new all-time highs last week ahead of the company’s financial results, but the announcement that the company was considering raising new capital shocked some investors. Now, Goldman Sachs’ downgrade may mean that the stock’s rally is over. The stock has pulled back and formed similar topping patterns on daily and weekly time-frames since arriving at this intersection of resistance in both price and time, notes The Street.

The stock now has a 29% downside based on Tamberrino’s price target. Last week, it was trading at $280 before the earnings report.

In pre-market trading on Monday, the stock was down by as much as 3.5% after the release of the note. At 12:01 p.m. Eastern, Tesla shares were down 4.24% at $246.22.