Greenlight Capital Replies to Elon Musk Letter

Greenlight Capital, Inc. (“Greenlight”), today sent the following letter in response to co-founder and CEO of Tesla, Inc. (NASDAQ: TSLA), Elon Musk’s tweet from this morning.

The full text of the letter follows:

Dear Elon,

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.

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.

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.

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.

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.

David Einhorn

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