Shares of Tesla jumped 9% Tuesday as a prominent short seller who has long criticized the company flipped his view on the stock just one day before the company is scheduled to report financial results.

Andrew Left at Citron Research wrote Tuesday morning that he is now “long” Tesla (TSLA). In a telephone interview with Barron’s he declined to detail the precise size of the stake but said it was built “over the past few weeks.”

Left is still party to a class-action lawsuit, announced in September, that alleges that Tesla—and its CEO, Elon Musk—manipulated its shares in connection with Musk’s August tweet about taking the company private. That suit, he said Tuesday, remains open. (Musk and Tesla settled fraud charges with the Securities and Exchange Commission in connection with that tweet.)

Musk agreed to give up his chairman role as part of the SEC settlement. Left remains critical about some aspects of Musk’s leadership, but he told Barron’s today that he expects Musk to remain CEO, at least until demonstrating that the company is “on track.”

With Tesla trading at around $286, the stock is down about 8% for 2018. Wall Street is looking for a third-quarter adjusted loss of 3 cents per share, according to FactSet. The company said Monday night that it would be announcing its third-quarter results on Wednesday, earlier than many had expected.

“I think they put up a big number,” Left said today. (Left told Barron’s that, while he doesn’t currently drive a Tesla, he would buy its Model X SUV if he were in the market for a car.)

Left sees the earnings timing as a bullish development. In his report, he noted: “The last time Tesla reported third-quarter earnings in October was in 2016—when revenue beat the consensus by 21%. Does anybody think that Tesla decided to move up its earnings release date because of bad news?”

Left wrote that Citron had ended a nearly 5-year-old short position and credited Tesla with successfully disrupting the automotive industry.

“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,” the Citron report said.

There's been no shortage of Tesla news lately, from the company’s announcement of a midrange Model 3 sedan to Musk’s increased stake in the company—as well as the SEC settlement. Quarterly production and delivery numbers have already set the table for tomorrow’s results.

Meanwhile, Musk, who is a frequent critic of short sellers on Twitter, refrained from tweeting about Left. The company did not respond to an email seeking comment about Citron’s position.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved