The war of words between Elon Musk and David Einhorn has just hit "insane mode".
Only hours after Elon Musk's snarky response to David Einhorn's "fraud" allegations in his quarterly letter, Einhorn has now Tweeted out a well-reasoned retort to Musk's senseless outburst.
In it, Einhorn takes on a measured and calculated tone, quietly dismantling Musk's nonsensical letter by asking pointed questions about the company's financials and accepting Musk's invitation to tour Tesla's facilities.
Einhorn opens the letter by taking exception with Musk's comment that he made numerous false allegations against the company. Einhorn invites 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 takes 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 accepts 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.
And then Einhorn fires a true warning shot: letting Musk know that his firm is intimately versed in, and has many questions regarding, the intricacies of Tesla's financials. Einhorn suggests a sit-down with Tesla's CFO, Zach Kirkhorn. He also goes on to question the accounts receivable at Tesla, an interesting topic that hasn't really been brought up too often among short-sellers and skeptics in the FinTwit world.
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.
Finally, Einhorn urges Musk to let him know how to proceed setting up a meeting (there was no delivery address for the promised second shipment of short shorts).
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.
Here is Einhorn's tweet in question:
Recall we reported that this morning Elon Musk took to Twitter at about midnight Pacific Time to once again taunt Einhorn. Responding to a Tweet of a Zero Hedge article that contained an except from Einhorn's Q3 investor letter, Musk copied and pasted his own letter back to Einhorn, referring to him as "Mr. Unicorn".
Musk started off maturely, with a pun on "Mr. Unicorn's" name, saying his Tesla bashing was just "saving face" with his investors. He then mocked Einhorn's performance, noting his "sharp drop in assets under management".
Dear Mr. Unicorn (fabulous name btw),
We read your Greenlight Capital Q3'19 Investor Letter, in which you make numerous false allegations against Tesla. It is understandable that you wish to save face with your investors, given the losses you suffered from Tesla's successful third quarter, especially since you've had several down years in performance and a sharp drop in assets under management from $15 billion to $5 billion. You have our sympathies.
Musk then stated that Einhorn has a "desire to feel somehow relevant" with his Tesla short at a time when other short sellers have been "recoiling from the public discourse".
We also recognize your desire to feel somehow relevant with your Tesla short position at a time when your friends in the Tesla short community have been noticeably recoiling from the public discourse, as the world is increasingly recognizing Tesla's contributions to science, safety and a sustainable environment.
Finally, he invited Einhorn to meet him and tour Tesla's facilities. "I'm certain your investors would appreciate you getting smart on Tesla," Musk says, before offering to send Einhorn more "short shorts":
To the extent that you have any desire to learn about the amazing progress the people of Tesla are making, I would like to extend an open invitation to meet with me to discuss Tesla and tour our facilities. For their sake, I'm certain your investors would appreciate you getting smart on Tesla. Finally, please allow us to send you a small gift of short shorts to help you through this difficult time.
Musk signed his letter "Treelon Musk" and appended a "kiss" emoji to the Tweet that he attached it to.
With Einhorn now accepting Musk's invitation for a direct dialogue, the ball has now moved back into "Treelon's" court.
We suspect this is nowhere near over and will continue to update this story as it unfolds.