Citron Turns Bullish On Tesla For The First Time

Less than two months after suing Tesla, Inc. TSLA and CEO Elon Musk for stock price manipulation, longtime short seller Andrew Left of Citron Research said Tuesday that he's long Tesla stock ahead of the company’s third-quarter earnings report.

What Happened

Left, who has been extremely critical of Tesla and Musk in the past and has been short the stock for nearly two years, said Tuesday that the fundamental Tesla story has become too compelling to ignore. The Model 3 is a market hit and the competition has failed to come up with a legitimate answer to Tesla, he said.  

“While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being DOMINATED by Tesla,” Left wrote in a blog post. 

Why It's Important

The latest U.S. electric vehicle sales estimates from the third quarter would have seemed unbelievable five years ago, but Tesla seems to be the only company that is capable of producing and selling EVs in the U.S, Left said. 

The Tesla Model 3, Model S and Model X are the three best-selling EVs in the U.S. in Q3, with 54,540, 8,000 and 7,000 vehicles sold, respectively, according to CleanTechnica and EV Obsession. The nearest competition is Toyota Motor Corp TM's Prius, with 6,268 vehicles sold.

$TSLA dropping earnings on top of $F tomorrow might be a bad sign for shorts. After reviewing all recent info on $TSLA dominating its categories, Citron is LONG Telsa for this quarter. Full report https://t.co/eZLSbtL0kg

— Citron Research (@CitronResearch) October 23, 2018

Left said Tesla is gaining market share from Toyota, Honda Motor Co Ltd HMC, BMW and Mercedes.

“Like a magic trick, while everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry."

What’s Next

Tesla investors will be watching Wednesday to see if the company delivers on its promise to become profitable and cash-flow positive for the first time in Q3. A figure of 500,000 annual auto deliveries at a gross margin of 20 percent would represent a price target for Tesla stock of $599, Left said. 

Left also confirmed that he is still litigating with Tesla and Musk over Musk’s “funding secured” tweet back in August.

Tesla stock bounced 5.6 percent Tuesday following Left’s bullish commentary and is now down just 20.2 percent overall in the past year.

Related Links:

Andrew Left Accuses Tesla, Elon Musk Of Stock Manipulation In Class Action Lawsuit

Report: DoJ Investigating Tesla, Musk's Go-Private Remarks