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Tesla Inc.'s wheels are collapsing, sometimes literally, and Silicon Valley's automaker appears to be "back on the verge of failure," Greenlight Capital told investors Friday. from David Einhorn.
The hedge fund titan, Einhorn, is a diligent critic of Tesla. He called the CEO, Elon Musk, "erratic and desperate" and compared last year to Tesla's trajectory on the way to the investment bank Lehman Brothers.
In its quarterly investor letter dated Friday, Greenlight criticized Tesla's safety record and highlighted Tesla's operational performance and demand.
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Although Musk may promise a worldwide demand of around 500,000 to 700,000 models 3, "the reality is quite different," the demand from fans being already satisfied, Greenlight said.
"If Q1 is an indication, the total annual total demand for Model 3 is 200,000 vehicles," he said. "We believe that Tesla's poor reputation for quality and service and the reduction of tax incentives limit demand in a broad sense."
Tesla reacted by price cuts, but these have only generated a minimal demand and weighed on Teslas' used vehicles, to which the company is exposed through its program of leasing, said Greenlight.
"We think that here and now society seems to be on the brink again," Greenlight said.
"Signs are ubiquitous: lack of demand, desperate price cuts, layoffs, closing and closing stores, closing service centers, cutting capital spending, announcing rushed products, and a new effort to distract investors from the problem of the demand. with the hyperbole on autonomous driving abilities (Tesla), "he said.
Tesla announced Thursday a new modification of its range of vehicles and its sales strategies. He ended online sales of the Model 3 version at $ 35,000. Customers can order this "standard" version by phone or at Tesla stores.
Tesla shares lost 9% in the last 12 months, compared with 9% for the S & P 500 Index.
SPX, + 0.61%
No other company deserved as much space as Tesla in Greenlight's quarterly letter, the hedge fund discussing its investment in Brighthouse Financial Inc.
BHF + 1.20%
in just a few paragraphs.
Greenlight began the six-page letter stating that 2019 "started on a good note," touting 11% returns for the first quarter, "virtually offsetting the fourth quarter loss" and compared to a return of nearly 14 % for the first quarter. S & P
Earlier this year, Greenlight had to deal with a wave of buybacks that pushed its assets under management to less than $ 3 billion, compared to about $ 5.5 billion in mid-2018 and $ 12 billion five years ago .
See also: Tesla stock falls after reporting that Gigafactory's expansion was pending
Greenlight's investment style remained a "challenging environment," with growth stocks outperforming value stocks.
"In the context of this unfavorable wind and the size of the short portfolio, we are satisfied with the quarterly result," says the letter.
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