Dear Superinvestor Bulletin Follower,
David Einhorn's Greenlight Capital is short Tesla. In his Q2 2017 letter he provides a few reasons why:
Tesla (TSLA) finished the quarter up 30% to $361.61. TSLA bulls look at Elon Musk, think of Steve Jobs, and decide TSLA is the next Apple. We have read many critiques of TSLA and we won’t repeat them here, but we will offer a few distinctions from Apple:
• When Apple launched the iPhone, it was immediately profitable. Apple has always cared about profits. TSLA does not make money selling cars, and Mr. Musk shows little interest in profits.
• When one person buys an Apple product, it makes the experience for other Apple customers better by supporting the developer ecosystem. This network effect attracts a stable and growing user base. TSLA is unlikely to sustain a competitive advantage by having a network of charging stations or by accumulating driver data.
• Competition was very slow to develop for Apple. Its peers (most famously Microsoft) publicly dismissed the iPhone as a threat. By contrast, every major car company in the world intends to compete with TSLA in electric vehicles. Consortiums are installing competing charging networks, and many competitors (including possible new industry entrants) are investing in autonomous driving.
• Steve Jobs attracted and retained a senior team of loyal lieutenants who implemented his vision, and Apple continues to have a deep bench. Mr. Musk is a one-man show (and one distracted with many ventures at that).
You can read Einhorn's full Q2 letter through the link below:
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