Tesla increasingly resembles Lehman Brothers
Adherents who believe in the uniqueness and great potential of Mask absolutely do not accept criticism from Russian sources, saying about it that this is just envy and hatred for the successes of Americans. But in fact, the criticism of Mask is far from being a Russian phenomenon. Many famous businessmen and eminent financiers are very critical of such a business.
For example, American investor David Einhorn, who heads the hedge fund Greenlight Capital, compared Tesla to bankrupt Lehman Brothers during the 2008 financial crisis.
The head of Greenlight Capital said this in a letter to investors following the results of the third quarter of 2018. The full text of the letter was published by the ValueWalk portal, as well as the ZeroHedge blog.
Einhorn said that the founder of Tesla is constantly bluffing in the desire to hide the financial problems of the car company, speaking with proposals for all the new "exciting" products.
At the same time, according to the head of Greenlight Capital, Ilon Mask understands that Tesla will not be able to become a profitable campaign, and deliberately provokes the American authorities,in order to be removed from the post of the head of the company in order to avoid future responsibility for its financial collapse.
“Evaluating Tesla, we recall Lehman Brothers, which went bankrupt 10 years ago. One of our key findings in assessing the situation with Lehman Brothers is that the company faced a credit crisis in 1998, but cleared it and was able to get out of these problems Instead of facing regulatory, legal, or even market consequences because of the inability to recognize real problems, the company was rewarded in 1998 when its business began to improve. This prompted the company’s leadership to become even more aggressive. approach during the next credit crisis in 2007 and 2008.
Lehman’s management threatened investors who staked down the company's shares, refused to raise capital (and even repurchased shares), and also publicly stated that the bank could be sold to private investors. Months later, shareholders, creditors, company employees, and the global economy paid dearly for the reckless behavior of Lehman management to lead the bank to bankruptcy.This situation could have been avoided if the authorities had taken a tougher stance on Lehman in 1998.
Today we see a lot of parallels in the current situation with Tesla. In 2013, Tesla was on the verge of collapse when buyers who paid for Model S cars could not get them. Tesla's cash reserves fell to a dangerously low level, and Chief Executive Officer Ilon Musk, in secret and desperation, tried to sell Tesla to Google. Instead of telling the truth to shareholders, Musk bluffed in an effort to overcome the crisis. There were neither regulatory, nor legal, nor market consequences for this inability to accept the real state of affairs. The company survived, and Mr. Mask was praised for his successful bluff.
In our opinion, this prompted Tesla's chief executive officer to the beginning of an even more aggressive deception. In 2016, Mr. Mask bluffed during the rescue of SolarCity by Tesla, demonstrating a very exciting, but fake product called the Solar Roof. Tesla started taking deposits in the amount of $ 1 thousand from those who want to buy this product in May 2017 and announced the launch of the product for sale in August 2017. But, as the reports show, as of May 31, 2018only 12 Sun Roofs were fully installed - 11 of them belonged to Tesla employees.
But, as in the case of Lehman Brothers, we believe that Tesla is beginning to face the consequences of deception. The unstable behavior of Ilona Mask shows that he also understands this. In August 2018, in an interview with the New York Times, he said: "In terms of personal pain, the worst for me is still to come." Given this prediction, we do not understand why anyone would like to own Tesla shares.
We believe this may explain Mr. Mask’s erratic behavior. He cannot make a car without losing too much money, and he cannot decide to cancel the program and return all deposits made to all customers. His behavior suggests that he is trying to do everything possible so that he can be removed from his post of chief executive officer so that he can escape responsibility. Leaving the position of head of the company is not an option for Mr. Mask, because he will not allow him to say that he could fix the problems of the company if he remained in that position. "
It is worth noting that Einhorn is not an impartial expert in this situation: Greenlight Capital takes short positions in Tesla shares, waiting for their further decline.In August of this year, Einhorn openly teased Mask, thanks to him for his “shorts with mechanical defects”.
At the same time, in recent years, Einhorn, like a number of other previously successful American financiers, in particular Bill Gross, with the scandal that passed from PIMCO to Janus Capital, Bill Ekman, who heads Pershing Square Capital, and John Paulson (Paulson & Co), lost a significant part of the assets under management (the amount of assets under management of Greenlight Capital decreased from $ 12 billion in 2014 to $ 5.5 billion as of July 2018) and, as noted by Institutional Investor magazine, also lost part of its reputation as a legendary manager.
Nevertheless, in comparison with Tesla Lehman Brothers there are certain rational elements, in particular in terms of irresponsible behavior of the leadership of both companies.
The Vesti.Ekonomika portal previously noted that after the accusations were settled by the US Securities and Exchange Commission (SEC) on Sunday, September 29, Ilon Mask was deprived of the opportunity to hold the post of chairman of the board of directors of Tesla and any other public joint-stock company in over the next 3 years.
However, despite increasing attention to its activities by US regulatory agencies,Tesla's chief executive allowed himself to make a frank attack on the authorities, saying on Thursday, October 4, that "The Commission for the Enrichment of Speculators is doing an incredible job."