Long-time Tesla critic Citron Research goes "long" on stock

Long-time Tesla critic Citron Research goes "long" on stock
FILE PHOTO:Two Tesla Model 3 vehicles are shown charging in an underground parking lot next to a Tesla store in San Diego, California, U.S., May 30, 2018. REUTERS/Mike Blake/File Photo -
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(Reuters) - Tesla Inc's shares rose nearly 7 percent on Tuesday, after long-time critic and short-seller Citron Research reversed its opinion on the stock to "long" from "short".

The change in view comes a month after Andrew Left-led Citron sued Tesla and its Chief Executive Officer Elon Musk, saying Musk fraudulently engineered his since-abandoned plan to take the carmaker private to "burn" short-sellers.

"Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant," the firm wrote in a research note.

Musk announced on Twitter on Aug. 7 that he might take Tesla private for $420 per share, in a $72 billion transaction for which "funding" had been "secured."

The U.S. Securities and Exchange Commission called those tweets "false and misleading" and accused Musk of fraud last month, seeking to remove him from his role in charge of the company. Tesla and Musk later settled with the regulator by agreeing to pay $20 million each and to make changes to management.

"While the media has been focused on Elon Musk's eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being dominated by Tesla," Citron said, adding that it was not withdrawing its lawsuit against Musk and Tesla.

Shares of Tesla, which will report third-quarter earnings after market close on Wednesday, were up 6.3 percent at $277.2 in morning trading.

(Reporting by Munsif Vengattil and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty)

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