David Einhorn Still Laboring Under Sad Misconception That Tesla Is Subject To Basic Logic

Why does he keep trying to apply financial logic to the factory of dreams?

Like many in his peer group, things have been pretty rough lately for good old David Einhorn. What with losing all that client money, getting shut down on his big GM play and the Mets being sellers at the deadline, Big Dave just needs a win.


But he seems to be barking up the wrong tree with his strange Tesla obsession. See, David Einhorn is a systematic value investor who likes to look at things through a logical prism. He's a master poker player with a long-term view of the world. He's a billionaire who drives a Honda Odyssey.

Of course David Einhorn doesn't understand Tesla.

Billionaire investor David Einhorn, who has been hurt by his bet against Tesla Inc, said on Tuesday that the electric car maker is over-valued and that the company is not adequately capitalized.
"The company is expected to burn over $2 billion this year as it begins production of its Model 3," Einhorn said on an earnings call for his reinsurance company Greenlight Capital Re. "It is currently only capitalized for the next three quarters," he added.


Listen, Einhorn knows how to crunch the numbers and model an investment, so you can forgive him for looking at Tesla's data and seeing a frighteningly short runway. But what Einhorn fails to understand - still - is that Tesla doesn't need cash to fly, it needs only belief.

Tesla has faced all kinds of headwinds this year, and - sure - cash is looking scarcer as Elon Musk deals with the aftermath of his SolarCity merger while pushing hard on the idea of upping Tesla's car production by a factor of intensity rarely unseen outside of a Dickens tale. During that period, the company's messianic CEO has openly admitted that he is distracted by his Hyperloop endeavor, his space rocket company, and his futuristic tunnel project.

Yet, look at Tesla this year:

Screen Shot 2017-08-01 at 4.56.46 PM

Unless David Einhorn is ready to short the blind devotion of Musk worshipers, he needs to reevaluate getting involved with Tesla. Because David Einhorn likes to trade money, and Tesla traffics in dreams.

Investor Einhorn sees cash burn at Tesla, sticks with short bet [Reuters]