Goldman Sachs on Monday downgraded Tesla Inc. shares to sell from neutral, citing near-term challenges including the launch of the Model 3. "While we believe Tesla currently has a lead relative to OEM peers with respect to vehicle technology adoption, electric vehicle architecture, and (potentially) battery scale, our concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs," analysts led by David Tamberrino wrote in a note. Goldman is expecting the launch of the Model 3, a mass market sedan, to be delayed and expects an accelerating free cash flow burn rate to weigh on Tesla's stock. The company is expected to raise capital again before the fourth quarter, said Tamberrino. Shares fell 2.5% in premarket trade, but have gained 35% in the last 12 months, while the S&P 500 has gained about 22%.
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