David Einhorn’s Greenlight says Tesla ‘on the brink’ of failure GlobeInvestor
David Einhorn’s Greenlight Capital renewed criticism of Elon Musk and his Tesla Inc , saying the electric car company again appeared to be on the “brink” of failure, according to a letter sent to clients of the hedge fund on Friday.
The letter cited a lack of demand, “desperate” price cuts, layoffs, “closing-and-then-not-closing” stores, closing service centers, slashing capital expenditures, rushed product announcements and “a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.”
“We believe that right here, right now, the company appears to again be on the brink,” the letter said. Greenlight is short Tesla stock, recently a profitable bet.Greenlight said its funds gained 11 per cent over the first three months of 2019, slightly below the gain of the S&P 500 Index. Despite the gains so far this year, “it continued to be a challenging environment for our investment style with growth stocks performing much better than value stocks,” the letter said.
Greenlight noted that last summer, Musk promised Tesla would be profitable and cash flow positive in every quarter going forward. “He repeated that forecast as recently as the end of January,” Greenlight pointed out. “That promise has failed to materialize.
Greenlight Capital and its founder Einhorn first rose to prominence for making a prescient call on Lehman Brothers’ accounting troubles before the firm’s collapse. Late last year, Greenlight compared Tesla to Lehman.Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience.
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