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The fact that Tesla is winning customers away from BMW, Mercedes, Toyota and Honda has convinced Citron Research, a respected short seller, to revise their opinion. After tomorrow's earnings call, Tesla could reach $350 as more short sellers throw in the towel.
Citron Research
Citron has been negative on Tesla for the last 5 years in large part because they expected more competition:
By the time this product is even approaching market, there will be multiple other 200-mile range plug-ins that have been out for years.
Today Citron says the reason they have reversed course:
Plain and simple -- Tesla is destroying the competition.
My Take
No one is always right, but it is so rare that anyone ever admits to being wrong that this is market moving news. Citron deserves credit for changing their mind publicly when the facts evolved differently than they anticipated.
Gorden Lam, one of my managers, has been the most consistently right about Tesla since he first bought it $196 in March 2016.
However, while a manager can be right about a stock, you don't get your return until the rest of the world starts to see things your way.
One way to tell when the world comes around to your point of view is when those who make the strongest counter-arguments start to agree with you.
Nasdaq reports Tesla short interest at 33.6 million shares. As more short sellers come around they have to buy 3 times Tesla's average daily volume to close out their positions.
Tesla's conference call is scheduled for tomorrow which is about a week sooner than normal. The odds are low that Tesla is in a hurry to announce bad news. More likely, they want to get the news out that Tesla had a record quarter and came close to profitability as Elon Musk has hinted. If that is the message delivered on tomorrow's call, I think we'll see Tesla trade up to around $350 pretty quickly as it did after the last earnings call before Elon Musk's unforced errors.
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