Tesla Slides After Einhorn Questions “Suspect” Accounts Receivable, Income Statement

It was only last November that David Einhorn and Elon Musk took their longstanding disagreements over Tesla’s financial viability to Twitter, launching a public feud between the two public icons which everyone could enjoy in real-time. Now, Einhorn is back for round two.

Appending a note to Elon Musk under a tweet he had first sent to the CEO back in November of 2019, Einhorn weighed in with questions about yesterday’s Tesla earnings, where he again questioned Tesla’s Accounts Receivable, incidentally the same question we highlighted in yesterday’s post discussing Tesla Q1 earnings, namely “how it is possible that the accounts receivable for the company was still a whopping $1.3 billion.”

Here’s Einhorn’s version:

“I remain curious about your accounts receivable. Tesla’s claim for why there are so many for a product where the customers pay up front, was that sales are crazily concentrated in the last days of the month – so much so that it matters if the month ends on a weekend.”

He continued, using Musk’s previous arguments against him:

“This quarter ended on a Tuesday. And, by all accounts sales were not back-end loaded as most of your market was shut-down at the end of March. Yet, Days Sales Outstanding rose from 18 days to 21 days. Can you or Zack explain?”

Dear @elonmusk @TSLA, More Boring Bonehead Questions pic.twitter.com/yohjj7FQfj

— David Einhorn (@davidein) April 30, 2020

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Einhorn then focused on Tesla’s margin numbers, just as we did yesterday.

“I have another question,” he wrote.

“This quarter your production was lower and split over two factories, affecting cost absorption particularly in Fremont. Your average selling price was lower. Your mix had fewer high margin Model S/X. You ramped up Model Y. Both factories were interrupted driving up costs.”

“And, though you didn’t discuss it, currency should have hit your margin by 2-3% compared to last quarter. All of these factors appear to be headwinds to your auto gross margin (excluding Regulatory credit sales) – which barely budged,” he continued.

“Can you or Zack explain?” he asked again.

“Otherwise, I will continue to be left wondering if not only your accounts receivable are suspect, but your income statement as well.”

The assault from Einhorn comes at an interesting time for Tesla. Not only has the issue of Tesla’s potentially fraudulent accounts receivable been percolating for the past three quarters, but as we also wrote earlier today, Musk is going to be due a large compensation award based on Tesla’s rocketing stock price, even as the company remains largely shut down.

Despite the issues of months past, including shutting down Fremont for the coronavirus, laying off hundreds of contractors and staff and putting himself on the hook for his own board’s D&O insurance, Elon Musk still seems set to cash in on a ~$845 million payday in the form of 1.69 million stock options at $350 per share.

In any case, since this is not the first time Einhorn has questioned Tesla’s AR without getting an answer, we doubt that an answer will be forthcoming this time either, even if the stock price – which slumped after the Einhorn tweet, is demanding some response.

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