Tesla shares took another leg down Friday afternoon after hedge fund manager and Tesla short David Einhorn of Greenlight Capital criticized the automaker in his third-quarter letter to investors.
Einhorn likened Tesla to defunct investment firm Lehman Brothers, which fell during the financial crisis of 2008. Einhorn is well known for correctly predicting the bank would fall.
“…Like Lehman, we think the deception is about to catch up to TSLA,” Einhorn said.
He compared several of CEO Elon Musk’s recent actions to Lehman’s threats toward short sellers and refusals to raise capital.
Einhorn thinks Musk is behaving erratically on social media and elsewhere because he is trying to get himself fired as CEO. He has made many promises he has not been able to keep, and realizes he can’t make Tesla cars without losing money but he cannot bear to cancel the program and refund deposits, Einhorn said.
He added, Musk’s plan to fully automate the automotive assembly factory has failed, and he is unable to produce cars at the speed, and cost, he had expected.
Greenlight’s short bet on Tesla was its second biggest winner during the quarter, and Einhorn expects Tesla’s fourth quarter revenue and earnings will fall significantly short of expectations. It is worth noting Musk had said he expected Tesla would be profitable from the third quarter onward.
Tesla shares were already down 5 percent Friday morning, a day after Musk sent out a tweet that appeared to mock the Securities and Exchange Commission, with whom Musk is trying to settle allegations of fraud.
Musk sent the tweet hours after the judge handling his settlement agreement with the SEC ordered both parties to explain why the court should approve it.
Musk and Tesla each agreed to pay separate $20 million fines to settle allegations that Musk misled investors in early August by tweeting that he had already secured funding to take Tesla private. As part of the settlement, Musk will step down as Tesla’s chairman for three years but will remain CEO and retain a seat on the board. The deal also requires that Tesla put in place a system for monitoring Musk’s public communications about the company, including his tweets.
Tesla was not immediately available for comment.
The company’s stock has been volatile throughout much of 2018 and is down more than 12 percent this year. It reached a 52-week high of $387.46 on Aug. 7 when Musk tweeted his plan to take Tesla private. The stock fell as low as $260.56 the day after the SEC filed charges against him, and then climbed as high as $311.44 on Monday, two days after the parties agreed to settle.
On Friday afternoon, shares were recently trading down about 7 percent.
Also in the mix, Musk said early Friday morning on Twitter that Tesla is releasing the ninth version of Autopilot, Tesla’s automated driver assistance system, but that it is holding back the release of a widely anticipated feature that would have given the system a considerably greater degree of control over the car, allowing the system to guide the car on and off the highway.