Tesla Inc. (TSLA) shares traded higher Friday, rising in the face of a weaker U.S. stocks, after analysts at Citron Research said critics of the company, as well as founder and CEO Elon Musk, were "over their skis", and suggested the stock could return to $320 per share.
Citron, a vocal short seller of Tesla and consistent critic of Musk and his myriad battles with the Securities and Exchange Commission, said the "volume of misinformation" about both Musk and the company has become "breathtaking, arguing that investors have ignored the real and impressive achievements of the controversial billionaire.
"Since Monday, Elon has: Negotiated $500 mil for the first wholly foreign owned auto plant in China, got support of the City of Las Vegas to build an underground tunnel (and) launched and landed the first vessel capable of carrying US astronauts in a decade," the note argued.
"What have you done?????," Citron asked.
Tesla shares rose 2.7% in late Friday trading to close at $284.14 each, a move that trims their five-day decline to around 5%.
Citron expects $TSLA back to $320. Critics have consistently been proven wrong as Musk has done more this week than most do in a lifetime. Who is the real deal in this argument? Can't wait for new Model S https://t.co/Fn9MwJO3Xn— Citron Research (@CitronResearch) March 8, 2019
Tesla shares have been under intense pressure of late, falling more than 15% since the start of the year after the U.S. Securities and Exchange Commission asked a Federal court to hold Musk in contempt for violating an earlier agreement on his use of social media.
The SEC said Musk's Tweet from earlier this month, in which he appeared to reveal material information on Tesla's production schedule, violated a September 2018 settlement that prohibited Musk from sharing company information without vetting from legal counsel.
The settlement itself, reached through U.S. District Judge Alison Nathan, was linked to an August 2018 Tweet by Musk over plans to take the clean-energy carmaker private that the SEC said was misleading to investors.
Those declines were accelerated when Musk said a move to offer a cut-down version of its flagship Model 3 sedan will likely result in a first quarter loss, only weeks after telling investors he would turn the clean energy carmaker into the black.
Tesla also said it would start shutting down its network of stores and showrooms to focus solely on online sales, a move that, along with the increased delivery costs linked to the new Model 3 sales, will carve into profits for the three months ending in March.
"Given that there was just a lot happening in Q1, and we're taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1," Musk told journalists on a conference call late Thursday. "But we do think that profitability in Q2 is likely." That view was reiterated in a Securities and Exchange Commission filing Friday.
The Model 3 reduction marks both the first price cut for Tesla and a significant commitment to mass production as it seeks to win new customers in the United States following the expiration of $3,750 in tax credits for clean energy vehicles last year and challenge lower-priced competitor such as Nissan's Leaf and the Chevrolet Bolt.