Round 2: Musk Responds To Einhorn’s “Fraud” Accusations, Mocks Greenlight’s Performance

Round 2: Musk Responds To Einhorn’s “Fraud” Accusations, Mocks Greenlight’s Performance

Emboldened by Tesla’s stock rising nearly 100% off its 52 week lows (and who knows what else), Elon Musk took to Twitter at about midnight Pacific Time to once again taunt short Tesla short sellers. This time it was Greenlight’s David Einhorn that drew his ire. 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 by claiming that Einhorn’s comments about Tesla were just “saving face” with his investors. He then mocks 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 states 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 invites 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. 

The responses from FinTwit ranged from the usual fawning admiration, to genuine confusion to hilarity:

Tesla skeptic Glenn Tongue responded by pointing out that Einhorn’s letter didn’t really have as much content on Tesla in it as it normally does. Regardless, it was enough to trigger Musk:

Other FinTwit members called Musk’s bluff:

The Wall Street Journal’s Charley Grant weighed in with some inconvenient truths:

Chris DeMuth Jr. of Rangeley Capital noted that Greenlight was edging out the S&P 500 this year, while Tesla isn’t even up 1% YTD:

And (of course), Electrek editor Fred Lambert called Musk’s outburst a “smart move” and said Einhorn is “kinda obligated to accept”:

As a reminder, as we pointed out first earlier this week, Einhorn wrote in his latest letter that his Tesla short was a “material loser”, and proceeded to accuse Elon Musk of orchestrating “significant fraud”:

Finally, to the surprise of nobody, documents in TSLA’s SolarCity litigation unsealed in September showed that Elon Musk knowingly orchestrated a significant fraud by arranging the $2.6 billion acquisition at a time when SolarCity was insolvent. Musk and his family had a huge conflict of interest, but rather than properly recusing himself, Musk initiated the transaction and drove the process. SolarCity was so cash-strapped, it was trying to delay payments to vendors after parts were delivered and the vendors had recognized the revenue; SolarCity could not raise any funds at reasonable rates from third parties; and Musk engineered the unveiling of the Solar Roof tile to convince TSLA’s shareholders to approve the deal, even though the product did not exist at the time.

As was the case with Musk’s extraordinary “funding secured” tweet last year, we believe this level of trampling of standard processes of corporate governance, ignoring methods to deal with related party transactions and self-dealing should lead to substantial consequences. For now, the accepted reality appears to be that Elon Musk is above the law.

The ball is now in David’s court:

Tyler Durden

Fri, 11/08/2019 – 07:57

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Author: Tyler Durden