Tesla Is Working in Einhorn’s Favor in 2019—Could This Continue?



David Einhorn is a Tesla bear

David Einhorn is known for being short on Tesla (TSLA). In November 2018, he mentioned that Tesla had peaked in the last quarter, calling the situation “as good as it gets” for the company. He based this comment mainly on his expectation that Tesla’s Model 3 sedan sales would wane going forward.

Einhorn was expecting a huge revenue and earnings disappointment from Tesla in the fourth quarter. Though the company’s results came in better than expected, its stock fell after its earnings announcement after its CEO, Elon Musk, announced the departure of its CFO, Deepak Ahuja.

Tesla stock is down 14.6% year-to-date, a significant underperformance compared to the broader markets (SPY) (IVV) and other automakers (GM) (NIO), as of March 8.

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Is Elon Musk in trouble again?

Tesla’s CEO is again dealing with the aftermath of some troublesome tweets. According to a Bloomberg report, on February 25, the US Securities and Exchange Commission “asked a judge to hold Musk in contempt for violating a settlement that required him to get Tesla’s approval before communicating material information to investors.” The issue related to Musk’s February 19 tweets, in which he said Tesla “will make around 500k in 2019.” In its fourth-quarter earnings (IWF) report, Tesla guided for the delivery of 360,000–400,000 vehicles in 2019.

Short bets and 2019 outlook

According to the latest consensus compiled by Thomson Reuters, only 32% of analysts covering Tesla stock have given it “buy” recommendations. Analysts’ skepticism about the company’s ability to maintain strong profitability and improve its margins could be driving this caution and pessimism.

While Einhorn’s Greenlight Capital’s (GLRE) short bet on Tesla didn’t go his way—at least in 2018—we’ll have to wait and see whether things turn around for him in 2019.

Billionaire investor Stanley Druckenmiller bought put options against Tesla in the fourth quarter of 2018.


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