David Einhorn, the hedge fund manager and a scathing critic of Tesla, is slamming the electric car maker (NASDAQ:TSLA) and comparing its problems to those faced by Lehman Brothers before the bank went under.
“Like Lehman, we think the deception is about to catch up to Tesla,” Einhorn said in a letter to investors first reported by CNBC. “Lehman threatened short sellers, refused to raise capital (it even bought back stock) and management publicly suggested it would go private. Months later, shareholders, creditors, employees and the global economy paid a big price when management’s reckless behavior led to bankruptcy.”
Shares of Tesla, which took a hit earlier after its CEO Elon Musk mocked the Securities and Exchange Commission via Twitter, dipped by 6.3% in the wake of Einhorn’s letter.
Einhorn also accused Musk of “bluffing” about Tesla’s finances, according to the CNBC report.
“There are many parallels to Tesla. In 2013, Tesla was on the bring of failure. … Tesla’s cash reserves fell to a dangerously low level and CEO Elon Musk secretly and desperately tried to sell the company,” Einhorn wrote, according to CNBC. “Rather than communicating the truth to shareholders, Mr Musk bluffed his way through the crisis.”
Einhorn’s hedge fund Greenlight Capital’s short position was its “second-biggest winner” during the third quarter, according to CNBC.
Einhorn is also forecasting that Tesla will post a “large revenue and earnings disappointment” in its fourth quarter, the article said.
Earlier this week, Musk insulted the Securities and Exchange Commission days after agreeing to pay $20 million to settle a fraud lawsuit with US regulators.
In a tweet, Musk called the SEC, the "Shortseller Enrichment Commission” and mocked their “incredible work”.
Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!— Elon Musk (@elonmusk) October 4, 2018
The terms of the deal Musk reached with the SEC ban him from serving as chairman of the electric car maker for three years and also force Tesla and Musk to each pay $20 million fines.
Contact Ellen Kelleher at [email protected]