Going into its financial results last week, Tesla’s stock was nearing new all-time highs, but the announcement that the company was considering a new capital raise spooked some investors and it continues today in pre-market after Goldman Sachs released a note to clients.

The firm expects that the Tesla Model 3 will be late and that the automaker will have to go to the market to raise capital by the end of the year.

Goldman Sachs’s David Tamberrino, who is relatively new to covering Tesla for the firm, downgraded the stock to a ‘Sell’ rating from Hold and dropped its price target to $185 from $190.

Tesla’s stock was down by as much as 3% in pre-market Monday morning following the release of the note. It’s now trading at ~$250 with a ~29% downside based on Tamberrino’s price target. It was trading at $280 last week before the earnings.

Like several other Wall Street analysts, he bases his views on expectations that the Model 3 will be late to market despite the fact that Tesla’s management reiterated that it was on track for production in July during the earnings last week.

He wrote in a note to clients:

“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.”

That’s despite Tesla going in much more details about their plans to achieve volume production during the earnings. CEO Elon Musk said that Model 3 is on track for production in July and 5,000 units/week by the end of the year.

The analyst also warns of dilution with what he sees as an inevitable capital raise by the end of the year.

Musk also talked of a possible capital raise, but he presented it as a derisking tactic and claimed that the company doesn’t actually need the money in the short-term with its strong cash position of over $3 billion.

Tamberrino is currently Ranked #4,325 out of 4,501 analysts on TipRanks, but to be fair he only recently took over coverage from Patrick Archambault on several stocks, including Tesla’s. He was on his team before that though so it’s worth looking at both the team’s history of coverage under Archambault (left) and now him (right):