David Einhorn's Greenlight: Tesla is on the verge of failure – customer letter

NEW YORK (Reuters) – David Einhorn's Greenlight Capital has reiterated his criticism of Elon Musk and his Tesla Inc., claiming that the electric car business appeared to be on the verge of failure, according to a letter sent to hedge fund clients on Friday.

The letter cited a lack of demand, "desperate" price cuts, layoffs, "closed and closed" stores, closed service centers, capital spending cuts, announcements of rushed products and "a new effort. to divert investors hyperbole demand problem compared to the autonomous driving capabilities of TSLA. "

"We think that here and now, society seems to be on the brink again," the letter says. Greenlight is a short stock of Tesla, recently a profitable bet.

Tesla did not immediately respond to a request for comment.

Greenlight said its funds had grown 11% in the first three months of 2019, a rate slightly lower than the S & P 500 index. Despite the gains recorded so far this year, "The style of our investment environment remained difficult, with growth stocks outperforming value stocks," says the letter. "In the context of this headwind and a significant short-term portfolio, we are pleased with the quarterly result."

Greenlight noted that last summer, Musk had promised that Tesla would be profitable and that its cash flow would be positive every quarter. "He repeated this forecast as recently as the end of January," said Greenlight. "This promise has not come to fruition. The question is: in a few months, will Musk boast of saving the company from failure, or will TSLA fail this time?

Greenlight Capital and its founder Einhorn first gained prominence by making an urgent appeal to Lehman Brothers' accounting problems prior to the bankruptcy of the company. Last year, Greenlight compared Tesla to Lehman.