Tesla Motors Inc.Stock Being Observed Closely

The auto-maker's stock price dropped after it received a short position from Citron Research.

Tesla Motors stock dropped by 3.5% on March 2, 2016 and commenced the trading session the next day in the red mainly because a short position was received by the auto-maker by Citron Research.

Due to the bearish stance that the research and financial services firm, Citron Research shared, the stock of the automobile company dropped by 2.91% and was being traded in the market for a share price of $186.35 Throughout the day, the stock remained in the red territory and finally ended at a share price of $186.26 down by as much as 0.05%.

The research firm, Citron Research is quite an influential firm when it comes to letting the investors know exactly where the stock is standing; it has hoped that by the end of the year Tesla stock will be close to $100. It stated that the news for auto-maker does not look good for the shares.  

In the current year, the stock of the automobile giant has dropped by as much as 20% and the short sellers are predicting that in the near term the stock is likely to fall further. Analysts are giving numerous problems as to why the stock could be falling to significantly this year while Citron Research has blamed the drop on ‘Supply and Demand’. Many analysts have a list of problems due to which they expect the short term to not be too bright for the stock.

Another thing any Tesla Motors fan will be aware of that it never compromises on its performance as well as its looks. It has managed to satisfy its customers in both those aspects. Additionally, the organization’s Model S has won the Best Car of the Year award two straight years in a row and it considered a successful EV brand all across the globe. Since the auto-makers cars alright popular with the people, the company has an edge to save money on maintenance cost such as advertising and promotions of the products.

Tesla prefers ‘word of mouth’ marketing and referral schemes because that floats the company’s boat. This way of marketing hardly costs anything in comparison to what its competitors are doing including BMW as well as General Motors. Due to this reason, the giant has hardly ever faced a ‘supply’ issue, if anything it has always worked on producing more cars. However, it has at times failed to meet its delivery target. This issue has been a problem for the organization for a few years now and continues to face it.

Investors of Tesla lowered their target prices mainly because of the production lag that was being experienced by the organization. Prior to the earnings call, a number of analysts talked about their concern over its ability to executive plans, these analysts included Adam Jones from Morgan Stanley and a number of others from Pacific Crest.