Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla, Inc. Stock Is Down Today

By Daniel Sparks – Feb 27, 2017 at 3:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One analyst is betting that Tesla's Model 3 production ramp-up will be slower than expected.

What happened

Tesla (TSLA -1.11%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$238.13 (-1.11%) $-2.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.