Tesla may have recently reported that its deliveries for the final quarter are looking strong, but Goldman Sachs is not impressed. Following the release of the report, the investment management firm downgraded Tesla shares from a buy to a neutral. The firm also brought down Tesla’s target stock price.
It seems Goldman Sachs has a number of issues with Tesla at the moment. The firm’s analyst Patrick Archambault said in his research note that there is “incremental risk to the business related to management’s deployment of capital for M&A.”
Archambault also said there is a possibility that Tesla’s production and delivery of its new Model 3 car will be delayed, which will be further “detrimental to shares.” In fact, he expects actual production to be slower than what Tesla had set in its guidance recently.
For all these reasons, Goldman Sachs had adjusted Tesla’s stock price from $240 to just $185, according to a report from Investor’s Business Daily. Furthermore, Market Watch reports that another Goldman Sachs analyst, David Tamberrino, says that he is concerned by Tesla decision to deploy its capital to acquiring investments, such as the recent plans to buy SolarCity. For him, it has made Tesla a “higher risk entity.”
Just earlier this month, Tesla had released its third quarter 2016 Production and Deliveries report. The previous quarter proved to be a relatively strong one for the electric vehicle maker as it managed to increase it deliveries by a little over 70 percent compared to its performance during the second quarter.
In the same report, Tesla declared that it is sticking by its guidance of 50,000 vehicle deliveries for the remainder of 2016. This is despite the final quarter being shorter and deliveries becoming more challenging during the winter holiday season. Following the release of this report, Tesla’s stock went up quite significantly.
With Goldman Sachs’ downgrade, however, the company’s stock took a good tumble. Tesla stock has now fallen 3.6 percent to $201.