Einhorn on Tesla: ‘Like Lehman, we think the deception is about to catch up’

Hedge fund manager David Einhorn is blasting Tesla again.

The investor compared the electric car maker to his most famous and prescient bearish call on Lehman Brothers.

“Like Lehman, we think the deception is about to catch up to TSLA,” Einhorn said in an investor letter Friday. “Lehman threatened short sellers, refused to raise capital (it even bought back stock), and management publicly suggested it would go private. Months later, shareholders, creditors, employees and the global economy paid a big price when management’s reckless behavior led to bankruptcy.”

In May 2008, just a few months before Lehman Brothers declared bankruptcy during the heart of the financial crisis, Einhorn said at the Ira W. Sohn Investment Research Conference that the investment bank was a risk to the financial system and questioned its accounting. He confirmed his firm Greenlight Capital was short Lehman during that speech.

Shares of Tesla, which were already down Friday in light of CEO Elon Musk’s tweets mocking the Securities and Exchange Commission, dropped following news of Einhorn’s letter and closed down 7.1 percent.

Elon Musk 

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Musk has taunted short sellers including Einhorn in the past on social media.

Einhorn said like Lehman, Musk has “bluffed” about the company’s financial position.

“There are many parallels to TSLA. In 2013, TSLA was on the brink of failure. … TSLA’s cash reserves fell to a dangerously low level and CEO Elon Musk secretly and desperately tried to sell the company,” he said. “Rather than communicating the truth to shareholders, Mr. Musk bluffed his way through the crisis.”

Einhorn said his fund’s Tesla short was the second-biggest winner during the third quarter. The investor has repeatedly criticized the electric car maker as part of his bets against overvalued technology companies, which he calls the “bubble basket.”

The hedge fund manager predicts Tesla will report a “large revenue and earnings disappointment” for its fourth quarter.