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Tesla (TSLA) short responds to Elon Musk’s invite with odd demands and side remarks

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Tesla (NASDAQ:TSLA) short and hedge fund manager David Einhorn has issued a response to Elon Musk’s invitation to meet and visit the electric car maker’s facilities. Einhorn agreed to meet with Musk in his response, though he had a number of odd demands and remarks that went along with his acceptance. 

Similar to Musk’s letter, Einhorn’s response was long and posted on Twitter via a screenshot. In it, the Greenlight Capital President challenged the Tesla CEO, claiming that while both his hedge fund and Tesla “struggled” last year, his business has generated “real profits for investors” since it was established in 1996. He also denied that his TSLA short has performed badly as well, arguing that it has merely “fluctuated.” 

Following is Einhorn’s letter to Musk in full. 

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Dear Elon, 

I am glad that you read our October letter and would like to discuss it. You say we “made numerous false allegations against Tesla.” 

Could you be more specific? Can you point to at least one sentence that is false and refute it with facts? We certainly are capable of making mistakes and if we said anything false, we will correct it for the record. Facts do matter to us. I can’t imagine how it would feel to have entire websites like https://elonmusk.today chronicling your untruths.

Our business have some similarities and differences. We both struggled last year. However, a key difference is that Greenlight’s business has generated real profits for our investors since we began in 1996. Tesla’s business financials reflect a decade of annual losses and an accumulated deficit of $6 billion, despite billions of dollars of taxpayer subsidies. 

As for our short of Tesla, it’s fluctuated. In a multi-year bull market, it hasn’t performed badly. By continually changing the narrative and narrowly averting crisis after crisis, you have certainly kept it interesting. We shall see what happens from here. 

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We welcome your offer to let us learn more about Tesla and will take you up on it. This is a stark contrast from Tesla’s prior position, as your IR team has refused several requests from us to converse directly and answer our questions. 

I think facility visits would be fun (can we start in Buffalo?). I might learn the difference between your alien dreadnought factory and cars made by hand in a tent. 

The truth is we are much more interested in, and have many questions about, your financial statements.  Perhaps, we could spend some time together with your CFO, Zach Kirkhorn. 

As an example, my understanding of auto sales is that car buyers don’t typically drive off the lot without paying for the car. Publicly-traded auto dealers have only a couple days of account receivable balances. Yet, Tesla is owed over $1 billion by its customers. With customers paying up front, why are the balances so high? In September 2018, you said the receivables doubled up because the quarter ended on a Sunday. That answer wasn’t very satisfying at the time. This year, the quarter ended on a weekday. Sales are lower than they were a year ago and yet, the receivables were high. We are curious. 

We have dozens of questions like that. 

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I truly appreciate your offer to build a direct communication so we can learn more about Tesla. Please advise on how we should go about scheduling. And have a nice weekend. 

David Einhorn

Looking at Einhorn’s response, it appears that the TSLA short is not really taking an open-minded approach in responding to Musk’s letter. Instead, Einhorn seems to be doubling down on his allegations of fraud against Musk with his suggestion that the electric car maker’s finances don’t line up. With such a response, including snide, outdated references to GA4, it would not be very surprising if Tesla does not choose to go forward with Elon Musk’s initial invitation.  

This is quite ironic considering that Einhorn himself and his fund, Greenlight Capital, were fined by the UK Financial Service Authority (FSA) for £7.2 million (US$9.27 million) for insider trading. According to the FSA, Einhorn engaged in “market abuse” in relation to a fundraising by pub group Punch Taverns in June 2009. Greenlight has also struggled over the past year, being unable to beat the market and declining 34% last year, its worst year since the fund was founded.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

Tesla blacklisted by Swedish pension fund AP7 as it sells entire stake

A Swedish pension fund is offloading its Tesla holdings for good.

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tesla
(Credit: Tesla)

Tesla shares have been blacklisted by the Swedish pension fund AP7, who said earlier today that it has “verified violations of labor rights in the United States” by the automaker.

The fund ended up selling its entire stake, which was worth around $1.36 billion when it liquidated its holdings in late May. Reuters first reported on AP7’s move.

Other pension and retirement funds have relinquished some of their Tesla holdings due to CEO Elon Musk’s involvement in politics, among other reasons, and although the company’s stock has been a great contributor to growth for many funds over the past decade, these managers are not willing to see past the CEO’s right to free speech.

However, AP7 says the move is related not to Musk’s involvement in government nor his political stances. Instead, the fund said it verified several labor rights violations in the U.S.:

“AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States. Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues.”

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Tesla made up about 1 percent of the AP7 Equity Fund, according to a spokesperson. This equated to roughly 13 billion crowns, but the fund’s total assets were about 1,181 billion crowns at the end of May when the Tesla stake was sold off.

Tesla has had its share of labor lawsuits over the past few years, just as any large company deals with at some point or another. There have been claims of restrictions against labor union supporters, including one that Tesla was favored by judges, as they did not want pro-union clothing in the factory. Tesla argued that loose-fitting clothing presented a safety hazard, and the courts agreed.

tesla employee

(Photo: Tesla)

There have also been claims of racism at the Fremont Factory by a former elevator contractor named Owen Diaz. He was awarded a substantial sum of $137m. However, U.S. District Judge William Orrick ruled the $137 million award was excessive, reducing it to $15 million. Diaz rejected this sum.

Another jury awarded Diaz $3.2 million. Diaz’s legal team said this payout was inadequate. He and Tesla ultimately settled for an undisclosed amount.

AP7 did not list any of the current labor violations that it cited as its reason for

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Investor's Corner

xAI targets $5 billion debt offering to fuel company goals

Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

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(Credit: xAI)

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.

Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.

According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.

Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.

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Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.

As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.

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Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

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Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.

“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.

“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.

In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.

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Elon Musk echoed Wood’s optimism in a CNBC interview last month.

“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.

Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.

The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.

Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.

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