Tesla Motors Inc (NASDAQ:TSLA) stock is now a target of one of the most terrifying short sellers on Wall Street. The question: is it something investors need to worry about?
Andrew Left of Citron Research—the notorious short-selling firm—disclosed in a tweet that his company is now shorting Tesla stock. Recall that Left is known for taking down stocks like Valeant Pharmaceuticals, GoPro, and Mobileye.
This time, he cites Tesla’s “supply” and “demand” problems to be the reason for the Citron short bet on TSLA stock. Left said that the stock should drop to $100.00 by the end of this year.
Citron shorting $TSLA Supply AND demand problems should take down to $100 by years end. News flow all around does not look good for stock
— Citron Research (@CitronResearch) March 1, 2016
Speaking with CNBC, he shed some more light on his position. But if you pay attention, you’ll find him refuting himself. (Source: “Citron exec: This is Tesla’s biggest problem,” CNBC, March 2, 2016.)
Left said that last week’s Geneva Auto Show confirms that by 2019 to 2020, nearly every automaker will be making long-range electric vehicles (EVs). But isn’t that what Elon Musk has long been predicting?
The more the traditional automakers switch over to EV technology, the bigger this industry will grow and the wider its ecosystem will expand. Naturally, the growing industry will pull in bigger investments from both the public and private sectors. Ultimately, more EV charging stations will be set up, making EVs viable for average drivers in almost all geographical areas.
In other words, this doesn’t create problems for Tesla on the demand side, but rather solves the company’s problems.
Left also said that drawing a direct correlation between oil prices and the share price of Tesla stock is wrong. If he believes so, that further weakens his bearish case on Tesla.
Statistics show that the oil glut will likely continue to keep oil prices low in the foreseeable future. So, the recent rally in oil prices is expected to be short-lived. But if we go by Left’s analysis, low prices shouldn’t have an impact on the demand for EVs. In other words, he just refuted himself.
As for the supply side, Left may be right to a certain extent. There’s no questioning the fact that Tesla has faced delivery delays in the past. But let’s also not forget that this automaker is still in its early growth phase.
“Model X” production was delayed only to ensure quality. Meanwhile, “Model S” deliveries covered for the slowdown in the Model X. Overall, the company managed to deliver within the guided range. For full-year 2015, the company delivered a solid 50,000 vehicles. In 2016, Elon Musk has promised to take this number to 90,000.
Plus, Tesla is back in the game. The company has once again ramped up production of its Model X. At the same time, it’s gearing up to unveil the “Model 3” this month. From where I see it, it’s not all doom and gloom on the supply side for Tesla stock.
The Bottom Line on TSLA Stock
The fact of the matter is that Tesla is still a high-growth stock that enjoys strong support from Wall Street. For Tesla’s hardcore fans who share Musk’s vision, Tesla stock is more than just an investment in a company—it’s an investment in the future of Mother Earth. The green energy enthusiasts support TSLA stock for more than just its business.
Left’s short position may take Tesla stock down a bit, but I don’t see it hitting $100.00 anytime soon. TSLA stock’s growth story is far from over.