Then, the house leaked and it rained all night.
At the same time as the closing bell rang, the Short Selling report of Citron Research was sent to the mailboxes of major Financial Media.
In his report, Andrew Left elaborated on why he abandoned his previous bullish stance on Tesla and turned overall bearish.
The core arguments of the report are:
Tesla is facing the dual dilemma of weak demand and cash consumption.
The delivery volume in the first quarter dropped by more than 30% from the previous quarter, and the Information Disclosure mechanism promised by Elon Musk in the SEC settlement agreement was in vain.
Investors cannot trust any performance guidance given by Tesla management.
Left also specifically mentioned the balance sheet of Tesla--
"Cash on the books in the first quarter has dropped to about US Dollar, with debts about to mature reaching US Dollar, up to NT$920 million, and Elon Musk is still distracted by SpaceX's Starship project.
We believe Tesla needs immediate financing, but the current stock price level and market environment may make financing extremely difficult."
At the end of the report, it was written that Citron officially established a position of Tesla Short Sellers, with a target price far lower than the current stock price.
Obviously, more than a handful of Short Sellers are eyeing Era Vanguard and Tesla--
Muddy Waters, Citron, those Hedge Fund that were harvested by Era Vanguard at the high level of Bitcoin,
In addition to the more sharks attracted by the "The Wall Street Journal" report, Wall Street's greatest Short Sellers power is gathered here.
Tesla's first-quarter delivery and profit data support their judgment.
In the eyes of all Financial Media who are paying attention to this matter, Era Vanguard is already a victim of the knife--
Its Tesla Pledged Shares is being pushed step by step towards Liquidation Line, and Cash Reserves is close to being exhausted.
The pledge financing of SpaceX equity takes time, and Short Sellers will not give it this time anymore.
As soon as Citron's report was released, Zhao Chen called Lin Shicheng.
Although the worst outcome would be to reduce his holdings of Nvidia and be targeted by the SEC, he didn't want things to get so bad.
Nvidia is the sea of stars, he can't give up no matter what.
"Lawyer Lin, Citron, how influential is this organization in Wall Street?"
Lin Shicheng is sitting on the sofa, the coffee in front of him has been refilled to the second cup.
Hearing this question, he put down the cup and tapped his knees twice with his fingers.
"Zhao Zong, Citron and Muddy Waters are all Short Selling mechanisms, but their weights are different.
Muddy Waters is a sniper rifle, Citron is more like a loudspeaker."
He pulled out a document from Briefcase and turned to the page of Citron.
"Wall Street has a joke - Muddy Waters can cut a company's stock price in half, and Citron can make it fall by 30%.
Muddy Waters's Short Selling reports are often hundreds of pages long, including field investigations, financial Model, and industry comparisons.
Carson Bullock and his team will stay in the city where the target company is located, review Court files, and interview former employees.
Using the method of investigative reporters to collect evidence, the chain of evidence is so solid that companies targeted by Short Selling often take several months to respond one by one.
Therefore, the success rate of Muddy Waters Short Selling is more than 80%. In history, many companies have been delisted or delisted because of the Muddy Waters report.
The market's great respect for Muddy Waters lies in its ability to withstand investigation--
After the report is issued, regulatory agencies will often follow up and audit agencies will re-examine it. This is where it is really lethal."
He turned to the next page.
"Citron is different. The operation mode of Citron is another mode:
Andrew Left rarely does on-the-ground investigations, and his reports are mainly based on reinterpretations of public information and radical reasoning.
Supplemented by provocative headlines and wording, he knows how to grab the market's attention, and he is very familiar with the media circle.
Know how to make your reports cover the most trading terminals in the shortest time.
To the market, Citron's report is regarded more as a short-term trading signal--
Most Hedge Fund will not change their fundamental position on a stock because of one of its reports, but they will go with the trend and push it away.
If you want to draw an analogy between the two:
Muddy Waters is like a federal prosecutor's indictment, once it is released, the entire market will enter review mode;
Citron is more like a trader with a loud voice shouting orders in the trading hall. Everyone will listen, but not all believe it.
But it should not be underestimated. It has its own uniqueness. The biggest feature is that opinions change very quickly--
Switch between long and Short Sellers at any time. Sometimes a report is issued in the morning to be bearish, but a few months later it will be bullish.
Tesla is the most typical example: In March 2016, Citron tweeted Short Selling Tesla, claiming that supply problems would cause the stock price to fall to 100 US Dollar.
But later the stock price did not halve, and Citron did not make any money.
The day before Tesla released Q3 Report in October last year, Left suddenly announced that it would abandon its five-year Short Selling position and switch to long Tesla.
At that time, Model 3 proved to be a hot-selling product, and Left himself admitted that "many warning signs about Tesla proved to be unimportant." This bullish report caused Tesla to rise 13% against the market that day."
He paused.
"In March this year, Left issued another bullish report, saying that the criticism and demonization of Elon Musk was too radical, and believed that the stock price of Tesla would return to 320 US Dollar.
But just over a month later, the Short Selling report came out at the end of April--
Announced that it would no longer be long Tesla, citing "disappointment with the way Tesla communicated with shareholders."
Zhao Chen leaned on the back of the sofa and slowly turned his fingers around the edge of the tea cup.
"From Short Selling to long, from long to Short Selling, three cards were turned over in three years. What is the logic of Citron?"
"There are two core reasons why Citron changes."
Lin Shicheng Close the file,
"First, its analysis framework of Tesla is highly dependent on Elon Musk's own remarks and the company's communication caliber, rather than in-depth analysis of financial Fundamentals--
Once Elon Musk converges on Twitter or becomes less cooperative, its confidence is shaken.
Second, Left has a very close relationship with the media circle. He knows what angles of stories the media needs to create buzz, and he can cooperate to meet this need.
Therefore, the credibility of Citron's short position and Muddy Waters's short position are different in the market.
Muddy Waters said that Short Selling is a stock, and all Wall Street will seriously examine its logic;
When Citron said it wanted a stock in Short Selling, the market's first reaction was - how long can it be in charge this time?"
After Lin Shicheng's explanation, Zhao Chen probably understood the difference between Citron and Muddy Waters.
To put it bluntly, Citron relies on creating topics. They know how to package a Short Selling report into golden sentences that the media is willing to quote repeatedly.
The report of Muddy Waters is for the SEC and institutions, and the report of Citron is for the editor of CNBC and the editor of Financial Headlines--
Although the damage of the latter is not as accurate as the former, its propagation efficiency is extremely high.
Now Muddy Waters and Citron are on the side of Short Sellers at the same time, which means that Era Vanguard is facing a ground heavy armored force and a media bomber circling overhead.
One is a threat at the professional level, and the other is a threat at the public opinion level.
When two threats are superimposed, the effect is not additive, but multiplicative.