Electric carmaker Tesla Motors Corp.’s (TSLA) shares declined by 3.6% to $201 after analysts at investment bank Goldman Sachs Group Inc. (GS) downgraded the stock from Buy to Neutral and cut their price target for the stock to $185 from $240. The downgrade comes after Tesla reported record-breaking car deliveries for the third quarter. (See also: Tesla Reports Biggest Quarterly Sales)

The “incremental risk” associated with capital deployment in the merger between Tesla and SolarCity Corp. (SCTY) is one of the reasons for Goldman Sachs’ downgrade. The firm projects increased free cash flow and leverage for the combined entity. For example, they estimate a free cash flow of between $2.4 billion to $2.5 billion for next year and leverage figures that are 6.6 times greater than that for this year. The other reason for the downgrade is related to possible delays that the company might incur while launching the Model 3, its electric car for the masses. (See also: Behind Tesla's 1,173% Rise In 10 Years)

Despite the downgrade, the investment firm has a relatively positive take on Tesla’s near-term prospects. It is forecasting a loss of 59 cents per share for the car maker, when the consensus is for the company to report 93 cents in losses this year.

Goldman's estimates for the long-term, however, are an opposite of the consensus estimate.

Given its bearish stance on Model 3 deliveries, Goldman Sachs has a 48 percent lower than consensus on average for the 2017 to 2019 period. This is because the investment firm expects Tesla to increase expenses related to sales and marketing and research. Other analysts expect the car company to turn profitable next year.

To be sure, the firm’s downgrades for Tesla should be taken with a grain of salt. The investment bank upgraded Tesla a day before underwriting its secondary offering this May. An analyst from Devonshire Research said the downgrade had become “an after-hours laughing matter.”

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