On Tuesday, in a truly sad second quarter investor letter/postmortem documenting Greenlight’s egregious YTD underperformance, David Einhorn spent more than a little time lamenting investors’ seemingly limitless patience with Elon Musk.
“The market preferred his bravado much more than say, GMâ€™s actual accomplishmentsâ€, Einhorn wrote, after presenting a highlight reel of Musks’s recent shenanigans.
“During the quarter Mr. Musk attacked an analyst for asking ‘boring bonehead questions’ on the quarterly conference call, hung up on the head of the National Transportation Safety Board, assailed the media for the audacity to report that Teslaâ€™s customers crash while using ‘autopilot’, accused an internal whistleblower of ‘sabotage’, appeared to paint the tape with trivial insider purchases, and went on a tweetstorm calling for ‘the short burn of the century'”, an incredulous Einhorn remarked.
Yes, David, yes he did. Musk did all of those things and a whole lot more. He also fired rockets into space, marketed homemade flamethrowers and suggested he might transform himself into Willy Wonka on the way to running Warren Buffett out of the candy hustle. And that’s not even the half of it.
In light of all that and also considering the extraordinarily contentious debate about what exactly is going on with Model 3 production, Tesla’s quarterly results and especially the call, were the subject of considerable interest on Wednesday.
The results were, well, not horrible – depending on your definition of “horrible.”
Tesla burned through $739 million, less than the expected $900 million and the loss per share came in at $3.06 versus the $2.90 analysts were expecting. On the Model 3 front, Musk said he made 5,000 of them a week â€œmultiple timesâ€ in July and imagines making 6,000 a week by late August and 10,000 a week by the end of this year. Who knows. Certainly not me, and probably not Elon, but as David Einhorn learned the hard way, it doesn’t really matter.
Here’s what Musk said about profitability:
What was perhaps more notable – and it speaks to the inherent absurdity of this farcical tale that Musk’s behavior on the conference call is more newsworthy than the actual numbers – was Elon’s conciliatory tone with analysts. Specifically, Musk said he was sorry for his “bad manners” on last quarter’s call and proceeded to take questions fromÂ Bernsteinâ€™s Toni Sacconaghi and RBC Capital Marketsâ€™ Joseph Spak.
Let’s flashback to last quarter for a moment. Here’s what happened the last time Sacconaghi tried to ask Elon a question:
Antonio M. Sacconaghi – Sanford C. Bernstein & Co. LLC
And so where specifically will you be in terms of capital requirements?
Elon Reeve Musk – Tesla, Inc.
Excuse me. Next. Boring bonehead questions are not cool. Next?
And here’s what happened to Spak:
Joseph Spak â€“ RBC Capital Markets LLC
Thank you. The first question is related to the Model 3 reservations, and I was just wondering if you gave us a gauge as maybe some of the impact that the news has had. Like, of the reservations that actually opened and made available to configure, can you let us know, like, what percentage have actually taken the step to configure?
Elon Reeve Musk â€“ Tesla, Inc.
Weâ€™re going to go to YouTube. Sorry. These questions are so dry. Theyâ€™re killing me.
Elon would go on to make the situation worse when, two days later, he took to Twitter to â€œexplainâ€ why Spakâ€™s question was indeed â€œabsurdâ€ and also why Bernstein analystÂ Toni Sacconaghi might be a â€œboneheadâ€.
He thenÂ threatened to incinerateÂ shorts with flamethrowers.
Less than 24 hours later, he was back on Twitter suggesting, among other things, that aÂ short massacre was coming. Carson Block responded by reminding him that the VW squeeze was in fact the â€œshort burn of the centuryâ€.
Actually VW owns the “short burn of the century” award (2008). If you keep focusing on fantasies of stock market schadenfreude, VW’s Audi brand will probably end up owning much of $TSLA’s EV marketshare too. Even for a super capable guy like you, priorities have to matter.
— MuddyWatersResearch (@muddywatersre) May 5, 2018
The reference there is to this infamous episode:
Elon was having none of it. “This will be bigger”, he responded.
48 hours after that, Willy Musk/Elon WonkaÂ got $10 million worth of more high on his own supply.
Perhaps fearing things were going to deteriorate even further, RBC’s Spak penned an open letterÂ to Musk called â€œDear Elonâ€ on May 9, that found the analyst attempting to explain why it makes sense for folks like himself to ask questions about “trivial” matters like product demand, cash burn and other generally boring stuff unrelated to space travel and/or portable incinerator units.
“Some of these questions can seem dry, boring or short-term focused, but hopefully you can appreciate that anyone looking to invest in Teslaâ€™s future must first be comfortable with its present”, Spak wrote, before inviting Musk to attend a webcast or call “to talk extensively about all the amazing industry innovations you are driving and dispel any investor misconceptions you perceive.”
So you can perhaps see why folks were relieved on Wednesday afternoon when Musk apologized to Spak and Sacconaghi. Here’s what he came up with:
I’m not sure that’s wholly convincing, but it’s better than nothing, and look, at the end of the day, if investors want to keep the faith and Wall Street wants to keep allowing him to raise capital, well then I’m not sure it’s up to the rest of the world to judge his demeanor. Markets could simply take the keys away from him (car pun fully intended), but if everyone is unwilling to do that, well then when it comes to criticism, it might be time for folks to look in the mirror instead of looking at Tony Stark.
Finally, as to whether Wednesday’s apology is indicative of what to expect from a new, reformed Elon Musk, the following tweet about Einhorn seems to suggest the answer is definitively “no”.
Tragic. Will send Einhorn a box of short shorts to comfort him through this difficult time.
— Elon Musk (@elonmusk) August 1, 2018