Tesla's Apparent Oil Correlation Doesn't Make Stock A Buy: Why Citron Is Short
Tesla Motors Inc (NASDAQ: TSLA) shares are recovering on Wednesday after Citron's Andrew Left tweeted on Tuesday that he's again short the stock with a price target of $100.
"Recently, as the price of oil started to increase in the past week as did the price of Tesla...I heard too many commentators draw the correlation between the two, I said 'no, this is just wrong," he explained on CNBC.
Left added that he re-estabished his Tesla short around the $185 to $190 level.
Shares are now near $187.
According to Left, a few reasons to short Tesla right now are its balanced news flow, supply and demand issues and high expectations. "Read the sell-side research," Left said.
"Tesla speaks very closely with the analysts that cover the stock...someone like Morgan Stanley's Adam Jonas...when he updated his research and discussed his expectations that are 50 percent lower than what Tesla was expecting for total amount of cars sold in the next four years," he added.
Left, of course, is referring to Jonas' now-infamous research note that projected Tesla to hit 2020 unit guidance by 2025. That forecast called for Tesla to hit total deliveries in 2020 near 250,000 versus company guidance of 500,000.
And Jonas is one of Wall Street's biggest Tesla bulls.
News Flow Surrounding Tesla
"More importantly, it's the news flow surrounding Tesla," Left said. In the past, the majority of news stories surrounding Tesla were overwhelmingly positive. "Right now there's more balance."
Left referenced a recent Reuters report that suggested U.S. Department of Energy technologies could be better than those produced by Tesla.
"It's going to be more difficult to find the incremental buyer of the stock at these levels," Left concluded.
Latest Ratings for TSLA
|Oct 2016||Goldman Sachs||Downgrades||Buy||Neutral|
|Sep 2016||Cowen & Co.||Initiates Coverage on||Underperform|
|Jun 2016||Argus Research||Downgrades||Buy||Hold|
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