In the midst of continued tech stock downward market pressure, there is one major winner today and that is Tesla (NASDAQ:TSLA) after Andrew Left has committed a somewhat surprising/unsurprising 180 depending on your point of view which resulted in the stock popping by about 12.7%. Citron has been an active short in Tesla for a while now and even sued both the company and Elon after the infamous take private $420 tweet claiming market manipulation. Although Citron is still pursuing the lawsuit (probably validly), in a note published today the firm has signalled that the end of its short play is here and that they are now long the stock.
In a relatively brief note on its site (here), Citron summed things up in one sentence in particular when asking itself what has changed and answering with "Plain and simple -- Tesla is destroying the competition". It then goes on to look at various charts showing that the Model 3 is now the top luxury car in the US with quarterly deliveries massively spiking recently as we have also reported. It also looks at charts that the Model S is blowing away other large luxury cars in sales numbers and unsurprisingly, Tesla holds the first, second and third places in the top electric vehicles sold in the States.
In other major points, Citron notes:
- It thinks Tesla will be admitted to the S&P in April 2019
- Tesla has brought forward its earnings date for this quarter to tomorrow and the last time it brought an earnings report forward was when it hugely beat analyst estimates
- It thinks Tesla will be either there or thereabouts with regards to profitability and it may not need a cash raise
- Apart from Musk himself, T Rowe Price, Fidelity and Baillie Gifford are Tesla's largest shareholders and buying in more
- Convertible debt dissolves above $360/share, leaving just $2 billion in senior debt owed which should be manageable should profitability be reached
- Competition is "nowhere to be found" and no other car company has the connectivity and upgradeability with over the air updates that Tesla has
It is worth noting that the research cited by Citron is mostly sourced from CleanTechnica.com which obviously presents things in the best possible light it can for Tesla given its focus on clean, which may be slightly misleading. Comparing the Model 3 to the likes of the Mercedes-Benz (ETR:DAI) C, E, CLS and CLA class cars, BMW (ETR:BMW) 3, 4 and 5 series and the Audi (ETR:VOW3) A4 and A5. The Model S meanwhile is compared to the Lexus (TYO:7203) LS, BMW 6 and 7 series, Mercedes-Benz S class, Porsche Panamera, Genesis (KRX:005380) G90, Jaguar XJ and Audi A8.
It's fair to say that there is a huge spread in terms of quality and class of car that is being considered here but although the data is perhaps presenting things with a reasonable degree of confirmation bias, the overall thesis seems undeniable, Tesla is here to stay and Citron is now fully on the bandwagon (although still with a lawsuit).
Keep it tuned here for the earnings.
About the author: Run Product Management for Aquis stock exchange. Designed, built and managed several market making, algorithmic and aggregation trading systems for most exchange traded asset classes including Equities, FI, FX and Commods cash and derivatives markets as well as multi-venue FX spot. Massive PC gamer!
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