Steve Eisman, the Neuberger Berman Group money manager who famously predicted the collapse of subprime mortgages before the 2008 financial crisis, is shorting Tesla Inc. over a series of doubts about the electric-car maker.
“Elon Musk is a very, very smart man, but there are a lot of smart people in this world and you’ve got to execute. He’s got execution problems,” Eisman said in an interview with Bloomberg Television. “He’s nowhere in autonomous driving, as far as I can tell, and big competition is coming in his space next year.” Representatives for Tesla didn’t immediately return a call for comment.
Tesla, whose eroding cash position has alarmed some investors, recently asked suppliers to return a portion of payments for parts to help the electric-car maker to turn a profit. Musk, who’s CEO, has said that the company will be profitable in the third and fourth quarters of this year as it produces 5,000 Model 3 sedans a week. The manufacturer exceeded that threshold in the last week of June, but has yet to prove it can sustain those numbers.
Eisman was dismissive of Tesla building cars in a tent outside its California assembly plant and cited management turnover as another negative. Famed investor Jim Chanos, one of the most vocal Tesla short sellers, also has called the number of top deputies Musk has been churning through “stunning,” and has said it’s comparable to what his firm Kynikos Associates Ltd. observed at Valeant Pharmaceuticals International Inc. and Enron Corp.
“The company has lost an enormous number of executives over the last two years,” Eisman said of Tesla on Friday. Referring to Musk, he said “we’ll see -- maybe he pulls a rabbit out of the hat and gets the company going better. So far, the jury’s out.”
Execution Issues
In three of the last four quarters, Tesla has burned through more than $1 billion. The Palo Alto, California-based company may post about $900 million in negative free cash flow when it reports second-quarter results on Wednesday, according to the average of six analysts’ estimates compiled by Bloomberg.
Eisman’s comments on Musk’s execution challenges were reminiscent of remarks a portfolio manager for one of the electric-car maker’s major shareholders made earlier this month.
“We are very supportive, but we would like peace and execution at this stage,” James Anderson, a partner at Baillie Gifford & Co., Tesla’s fourth-biggest holder, said in a Bloomberg Television interview on July 11. “It would be good to just concentrate on the core task.”
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