Lemon Research, an influential seller who has been a strong critic of Tesla, reversed his position on the electric car manufacturer. About the face, as Citron Research outlined in a research note on Tuesday, the Tesla shares increased by 12.7 percent to close $ 294.14.
The research note entitled "Lemon reverses opinion on Tesla. The story has become too convincing to ignore," explains that it has taken a long position in Tesla because "Model 3 is a proven hit and many of TSLA's warning signs have been shown to not be significant. "
Investors who take Short positions on a stock are to bet the assets will fall in value. Lemon Research, founded by Andrew Left, has been a reliable and often vocal Tesla short, a position it has been established for years. Nearly five years ago, Left claimed that more 200 kilometers of cars would be on the market before model 3. In March 201
Lemon (aka Left) now says that model 3 sales and continued demand for model S have changed their thinking.
"Tesla appears to be the only company that can actually manufacture and sell electric cars," according to the note. "If you would have shown us the chart below five years ago, there's no way we would have believed it. It seems that it's the competition that takes Ambien." (CEO Elon Musk has tweeted to take Ambien.)
A tweet from Citron Research early Tuesday also warned that Tesla's decision to report earnings Wednesday "may be a bad sign for shorts."
Even with this sudden shift to a long position, Left said in the note that the company is "Continued sues Musk and Tesla, and this recent report has no bearing on today's case. " Left claims Tesla for alleged securities offense stemming from Musk's infamous farm-private tweets in August.
Tesla has met remarkable headwinds, including a volatile stock price, "Production Hell" and later, Logistics / Delivery Hell with Model 3, as well as a Securities Fraud and subsequent Settlement Agreement between CEO Elon Musk and the US Securities and Exchange Commission. There has been a steady stream of leading departures at a high level and questions about worker safety in the factory.
At the same time, Tesla still has very few competitors when looking at comparable prices and batteries. And sales continue to rise, indicating that all the drama around Tesla has not affected demand.
Chevy Bolt, an all-electric tailgate that gets an EPA estimated 238 miles to a single charge, was sold in late 2016. And while it was the first all-electric EV priced under $ 50,000 able to deliver a EPA rating range of over 200 miles, sales platform and down 17 percent since the beginning of 2018, GM reported in early October.
Jaguar is the newest all-electric luxury category competitor with the introduction of I-Pace, which has a base price of $ 69,500 and an EPA estimated range of 234 miles. The first I-Pace deliveries are just trickling in now. The wait continues for other expected players to hit the market, including the Audi e-throne, an electric SUV that seats five and starts at $ 74,800.
At the same time, Model 3, which has a base price of $ 45,000 for a new rear-wheel mid range range that has a 260-mile range, is sitting alone.
And Lemon Research has been won over – at least for now.