Another Rough Day For Tesla After Einhorn Piles On

Tesla, Inc. TSLA suffered another rough day of trading Wednesday after a horrible start to 2019, pushing the stock to its lowest level in three months.

Einhorn Piles On

In addition to the negative commentary from analysts, Greenlight Capital’s David Einhorn, who has been a longtime Tesla short seller, laid into Tesla CEO Elon Musk in his quarterly letter to Greenlight investors, referring to Musk’s recent run-in with the SEC that resulted in a fraud settlement a “bizarre situation.”

After receiving a $20 million fine related to Musk’s August 2018 tweet that he had “funding secured” for a Tesla buyout at a price of $420 per share, Musk said in a “60 Minutes” interview that he has no respect for the SEC. Einhorn said in Tuesday's letter that Musk might feel differently if the SEC had removed him from his CEO position at Tesla instead of just forcing him to step down as chairman of the board.

“After all, he committed blatant market manipulation and was rewarded with a fine, which he said was 'worth it,'” Einhorn wrote.

More Bad News

Last week, the automaker announced it will cut 7 percent of its workforce as it attempts to ramp up Model 3 production ahead of a major debt deadline in March. CNBC on Wednesday reported new details about this plan.

"Deep cuts occurred in its sales, delivery and Model S and Model X production teams, according to current and newly laid off workers. These people also said that Tesla has suspended night time production of its Model S sedans and Model X SUVs at its Fremont, California car plant," according to a CNBC report.

Analyst Downgrade

Several Wall Street analysts issued negative commentary earlier this week, a trend that continued Wednesday when RBC Capital downloaded Tesla from Outperform to Underperform and cut its price target from $290 to $245.

Analyst Joseph Spak said Tesla’s disappointing guidance issued earlier this month is a sign the company is finally starting to be honest with investors about its growth outlook.

“The company seems to be more tactful with messaging which is a long-term positive, but means downward pressure to growth expectations - which in our view are too high to justify current levels, let alone to add to positions,” Spak said.

The downgrade comes a day after Goldman Sachs and Needham raised concerns over the sustainability of Tesla’s demand and margins and questioned the company’s ability to tap into the mass auto market.

All the negative headlines have taken a toll on Tesla's stock. Shares closed down another 3.7 percent Wednesday at $287.59.

Related Links:

Tesla Has A Demand Problem, According To These Analysts

Analysts Tackle Tesla Price Cut, Demand Concerns

Posted In: David EinhornGreenlight CapitalJoseph SpakModel 3Model SModel XRBC CapitalAnalyst ColorDowngradesHedge FundsPrice TargetTop StoriesAnalyst RatingsGeneral