David Einhorn vs. Elon Musk
Hedge fund manager David Einhorn spent much of his Q3 letter to shareholders venting about everyone from Elon Musk to the central bankers at the U.S. Federal Reserve. The billionaire investor unloaded a ton of criticism onto the CEO of Tesla Motors Inc (NASDAQ:TSLA), arguing that Elon Musk is a snake-oil salesman masquerading as a visionary.
Before adding his own particular take on Musk, Einhorn quoted Dave Pell’s criticism that, “It’s pretty amazing that we live in an age when a CEO of two public companies can give a talk about colonizing Mars and shareholders don’t see that as a warning signal.” (Source: “David Einhorn Slams Elon Musk, Central Bankers In His Latest Letter,” Zero Hedge, October 28, 2016.)
Advertisement
Pell was referring to the talk that Musk gave earlier this month during which he sketched out his vision for a transport system that could help establish a human outpost on Mars. Musk has placed this bold endeavor at the heart of SpaceX, his private space exploration company.
Einhorn added, “It’s not so amazing when one considers that those same complacent shareholders have been willing to look past years of over-promising and under-delivering from a promotional CEO. Elon Musk’s ability to spin a yarn and keep a story going seems to mesmerize his investors, blinding them to the challenges the company is facing.”
At this point in his letter, Einhorn was focusing on the two publicly traded companies that Musk helps run: Tesla Motors Inc, which makes electric cars, and SolarCity Corp (NASDAQ:SCTY), which builds and installs solar panels. Musk is the CEO of the former, and chairman of the latter.
Both companies have stumbled in recent quarters as the market grew impatient with their long-term goals and big-picture mentalities. Tesla, in particular, was losing goodwill over missed delivery targets and its constant raising of equity.
That being said, Tesla just delivered its first net profit in more than two years and outpaced its forward guidance for deliveries. The company also cancelled its planned stock issuance, saying that more capital was unnecessary at this point.
However, David Einhorn released his letter to shareholders a few days after Tesla announced earnings, so its changes did not cause his opinion of the company to swerve. But Elon Musk can take solace in the fact that Einhorn also turned his ire on Janet Yellen and her colleagues at the U.S. Federal Reserve.
“We are more than seven years into an economic recovery, yet central bankers behave as if we’re still in crisis,” Einhorn lamented. “Not only are experimental emergency policies being maintained, they are being expanded despite little evidence that they are needed or helpful.”
