Einhorn Says Tesla Once Again "On Brink of Failure"

-edited

“We believe that right here, right now, the company appears to again be on the brink.”

MarketWatch reports Tesla again ‘on the brink’ of failure, says Einhorn's Greenlight hedge fund.

Tesla Inc.’s “wheels are falling off,” sometimes literally, and the Silicon Valley car maker appears to “again be on the brink” of failure, David Einhorn’s Greenlight Capital told investors Friday.

Hedge-fund titan Einhorn is a frequent Tesla critic who has called Chief Executive Elon Musk “erratic and desperate” and last year compared Tesla’s path to the path of doomed investment bank Lehman Brothers.

While Musk may promise Model 3 worldwide demand of around 500,000 to 700,000, “the reality is quite different,” as demand from the fan base has already been satisfied, Greenlight said.

“If Q1 is any indication, total annual global demand for the Model 3 is 200,000 vehicles,” it said. “We believe that (Tesla’s) poor reputation for quality and service and diminishing tax incentives are limiting broader demand.”

“We believe that right here, right now, the company appears to again be on the brink,” Greenlight said.

“The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over (Tesla’s) autonomous driving capabilities,” it said.

Tesla Won't Survive

I side with Einhorn on one point: Tesla will not survive. The company has too much debt and its product is poor.

Timing is another matter. Story stocks survive much longer than anyone thinks, then collapse all of a sudden.

When? I don't know.

Mike "Mish" Shedlock

Comments
View Newer Messages
Jackula
Jackula

Gonna be had on the cheap by Apple or ? next recession at the latest. Smart money sells it now if possible.

Malcolm6
Malcolm6

Like most of you here and Mish, I am a sceptic of Tesla, and of electric cars in general. I personally do not like them. However, my brother, who is an electric car fan (almost a fanatic) bought a Tesla 3 which he has had for nearly a year and loves it. He has had no quality issues, and especially loves the self driving which he has found amazing, and he uses it nearly all the time (he is not stupid and keeps his eyes on the road and his hands on the wheel). My brother, and I are both climate sceptic, so this is not the reason he likes his Tesla. He likes the idea of electric cars because of their simplicity (he is an engineer, I am not), and feels they ultimately should be cheaper than internal combustion. He is also much more optimistic than I am that batteries will continue to incrementally improve. So my position is mainly that it is a very interesting saga to watch. But I am fairly sure that the market cap of Tesla is not sustainable even if Tesla survives.

BoneIdle
BoneIdle

Musk should have stuck with the upmarket models and then licenses out his technology to “real automotive manufacturers”.

IMHO as a electrical engineering and company director

hmk
hmk

My own impression is that Tesla faces an uphill battle. The stock is ridiculous, there is no basis other than speculation for it being that high, a story stock. I give Musk credit for trying but I feel he is becoming desperate to keep the company alive. I do feel bad for him. I just don't see a business case for EV's at this point but I believe at some point in the future technology will advance to make it practical and economic. I hope the company survives but hope isn't a good business strategy.

Tengen
Tengen

The "Mish Editor" spamming the comments has got to be Wagner. Only he would be obsessed enough with Tesla to pull a stunt like this.

Greggg
Greggg

His whole scheme may have hinged on The Paris Climate -Accord-, I mean Agenda ( better description) becoming a world wide thing. Oh my, it seems to be the center of protests, such a pity. Hearing gasoline at $1.62 per liter ($6.12/gallon) in British Columbia is very popular either.

Val012
Val012

The BIG point EVERYONE is missing is Elon LIES! He is scrambling and changing things SO RAPIDLY, because the company is drowning and gasping for air. How do you people NOT see this? I am NOT a hate of Tesla. I think the idea of EV's, to help save the environment, is an GREAT idea! I, however, am NOT a fan of liars! Elon promises and doesn't deliver! He sits on money, that has been given for reservations, but then doesn't come through! He can NOT be trusted! Just because someone may be very smart, it doesn't make them a good candidate, to run a company. He got LUCKY with the "pay pal"/Zip2 deal. Zip2 was only around 4 years, before it was sold! The average length of time, for a business to "make it or break it" is 7 years. If Musk held on to Zip2, for the entire 7 years, would it had been a success? One will never know, He sold to a company who made it more successful, as we know "Pay Pal now. The Model 3 (standard) was suppose to be the BOOST of the company, the high light! They are NOT even existing. When ANY company scrambles, so much, in weeks, changes things, changes things back, takes away a product, adds it back in, etc, you have to KNOW they are hurting financially, and pretty badly! They are on their way out! Tesla would be SO much better off, without Elon, and I HOPE and PRAY, if the SEC case goes back to the Judge, because of no deal, that the Judge bans him from being the CEO. AGAIN: EV's GOOD - Elon, BAD. Go buy an EV from a promising and a long existing company! AND, DON'T invest in Tesla! Your investment(s) will be worth pennies! Best of luck to all of you!

Latkes
Latkes

Did you place any bets, Mish?

Curious-Cat
Curious-Cat

Friends in CA just bought a new Tesla (for reasons surpassing understanding). They are constantly doing the math in their head about remaining distance on the battery charge, thinking about where to recharge and whether to pay $22 for a quick charge.

abend237-04
abend237-04

Government subsidy has kept heat under the BOW, (Battery on Wheels) auto segment for years now. Subsidy expirations are finally turning up the light and revealing the same physics that defeated Edison more than a century ago: Nukes will work; BOWs won't...still.

TheGreatMiginty
TheGreatMiginty

Being a genius in a highly competitive arenas is quite different than a new tech business. Elons constant reshuffling the agenda and sales strategy are definite signs he's struggling. Any profits he's made are from C02 credit swaps etc.