Musk is 'smoking' the car industry: Tesla's loudest foe is now a fan

A prominent short seller who's been betting against Tesla has changed his tune and sent the shares surging by saying the electric car maker is "smoking" the rest of the auto industry.

Citron Research's Andrew Left, a vocal and long-term Tesla short trader, said in a report on Tuesday that the electric-car maker is snatching customers from market heavyweights such as BMW, Mercedes, Toyota and Honda. In an interview, he said Chief Executive Officer Elon Musk has distracted investors from a company that's turning a corner.

"Elon Musk has made such a sideshow of himself that people started to forget about -- including myself -- the underlying business," Left said on Bloomberg TV. "It's a revolution that I actually underestimated -- the way people are buying these cars."

While everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry.

Short trader Andrew Left

Tesla surged 13 per cent a day before it's due to report earnings on Wednesday US time. Musk, 47, told employees as the quarter was coming to an end last month that the company was "very close to achieving profitability and proving the naysayers wrong." In addition to making money, he's predicted that Tesla will be cash flow positive, a turnabout from the billions of dollars it was burning while struggling to ramp up Model 3 production starting last year.

In scheduling earnings for Wednesday -- earlier than it has in the past -- Tesla sent a signal to some on Wall Street that it has good news to share. Adam Jonas, an analyst at Morgan Stanley, wrote that it's more likely to be a positive than negative sign and said he's expecting the company to forecast strong profit and cash flow for the fourth quarter. Citron Research tweeted a similarly bullish theory.

Left, 48, made headlines last month by suing Tesla and Musk over his infamous tweets on August 7 about trying to take the company private. Left claimed that Musk issued false and misleading information to manipulate Tesla's stock price and hurt short sellers.

"It's just business," Left said of his lawsuit against Musk in the interview. "On that particular day, I was short the stock [betting on a falling share price]. He said 'funding secured.' Funding wasn't secured. I want my money back."