Tesla shares rise after short-seller reverses opinion to predict long-term success
Tesla's share price rose almost seven per cent this afternoon, after a long-term critic of the electric vehicle manufacturer reversed its short position on the firm.
Citron Research changed its tune on Tesla from "short" to "long", writing in a research note that its Model 3 sedan is "a proven hit, and many of the [Tesla] warning signs have not proven to be significant".
The news comes just a month after Citron sued Tesla and its chief executive Elon Musk, arguing Musk had deliberately attempted to "burn" short-sellers when he caused mass trading of the stock after tweeting his plans to take Tesla private at $420 per share.
Citron has not withdrawn its lawsuit against both parties.
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Musk and Tesla reached a settlement deal with the US Securities and Exchange Commission (SEC) last month, which saw Musk step down as Tesla chairman for three years and both parties agree to pay a fine of $20m (£15.4m) each.
The SEC had charged Musk with securities fraud, and claimed he had sent the tweet without having secured funding or having agreed a transaction with his board or regulators. Additionally, he had settled on the number of $420 per share by adding a 20 per cent premium and then rounding up due to the number's significance in marijuana culture.
"While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behaviour, it has failed to notice the legitimate disruption of the auto industry that is currently being dominated by Tesla," Citron added.
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Tesla is set to report its third quarter results tomorrow night, which are hotly anticipated after the company released its vehicle production numbers earlier this month.
The electric vehiclemaker said it produced over 80,000 cars in the third quarter, while deliveries to customers reached a record 83,500 to surpass previous analyst estimates of 80,000.
Musk has openly set a goal of achieving profitability at the firm by the end of this year, despite reporting a widened loss last quarter.