Two weeks ago, Tesla CEO Elon Musk and hedge fund Greenlight Capital's founder David Einhorn went twitter-account-to-twitter-account with one another after the hedge fund manager made a well-reasoned argument about potential fraud allegations at Tesla (and Musk responded with ad hominem snark).
Possibly feeling emboldened by Musk's atrocious presentation of his Cybertruck last night, which we covered at length, Einhorn has again fired back at Musk, saying he hasn't heard back on Musk's promise for a tour - and questioning whether or not some of Tesla's accounts receivable even exist.
Einhorn's letter says that he hasn't heard back from Musk's investor relations team since he contacted them more than a week ago. He also calls out Tesla for supposedly telling people that there's a "very easy" explanation to Einhorn's questions about the company's A/R. Einhorn alludes that Tesla's IR team is telling people that "Europeans are paying by check on the last day of the month and money generally takes 2 days to clear in the U.S."
Given that asinine explanation to a seemingly genuine concern about the company's A/R, Einhorn concludes by asking whether Tesla's "accounts receivable exist".
I haven't heard back from you and I followed up by contacting your investor relations team more than a week ago. Silence.
What's more, I understand your IR people are saying (never mind REG FD) that there is a "very easy" explanation for the accounts receivable question I raised.
The purported answer (about Europeans paying by check on the last day of the month and money generally taking 2 days to clear in the US) doesn't even explain half the balance. Further, it is inconsistent with your explanation of the accounts receivable jump in inconsistent with your explanation of the accounts receivable jump in the September 2018 quarter, when the Model 3 wasn't even being sold in Europe.
I'm beginning to wonder whether your accounts receivable exist.
I'd still love to schedule a tour and, even more, some time with Zach.
A cursory search of the interwebs shows this explanation is extremely unlikely as the only country in Europe that uses checks (in any measurable level) is France...
We anxiously await Musk's snarky response... but of course, he is a little bust with his Mad-Max machines.
As a reminder, Musk's first response stated that Einhorn was only short because he had a "desire to feel somehow relevant":
Einhorn responded by taking exception with Musk's comment that he made numerous false allegations against the company. Einhorn invited Musk to publicly point out what allegations he was talking about.
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 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.
From there, Einhorn took jabs at Tesla's lack of profitability, chronicling the similarities between the two businesses (they both struggled last year) and the differences (Greenlight is consistently profitable, Tesla certainly is not).
Our businesses have some similarities and some 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 over $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 certainly have kept it interesting. We shall see what happens from here.
Einhorn then wisely accepted Musk's invitation to tour Tesla facilities, suggesting the company's solar plant in Buffalo, which has been an enormous taxpayer boondoggle, as a place to start.
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.
Einhorn then went on to question the accounts receivable at Tesla a first time:
The truth is we are much more interested in, and have many questions about, your financial statements. Perhaps, we could spend 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 accounts 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 stayed high. We are curious.
We have dozens of questions like that.