What happened

Tesla (NASDAQ:TSLA) stock fell as much as 5.8% on Monday after a Goldman Sachs analyst downgraded the stock to a sell rating. Shares are trading about 5.1% lower at the time of this writing.

So what

Goldman Sachs analyst David Tamberrino changed the stock's rating from a hold to a sell, dropping the firm's price target from $190 to $185, representing about 24% downside from Tesla's $244 price at the time of this writing. Following Tesla CEO Elon Musk's recent comments about the company likely needing to raise capital ahead of its Model 3 launch later this year, Tamberrino voiced concerns about the Model 3 timeline.

A silver Model 3 driving on a stretch of open country road

Model 3. Image source: Tesla Motors.

"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," Tamberrino said in a note to investors on Monday, according to CNBC.

Now what

While Tesla's cash position improved by about $300 million to $3.4 billion in the fourth quarter, Tesla expects to invest between $2 billion and $2.5 billion in capital spending in the first half of 2017, dwarfing its $1.3 billion in capital expenditures during the entire year of 2016. 

Tesla said in its fourth-quarter shareholder letter that it expects to begin Model 3 production in July, with deliveries going to employees first.

Investors should keep an eye on Tesla's Model 3 program to ensure it stays on schedule.

Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.