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Why David Einhorn Thinks Tesla Peaked Last Quarter

Tesla Inc. (TSLA) short-seller David Einhorn is cocksure that the electric car maker’s recent share price rally hand down prove to be short-lived.

The Palo Alto, California-based company’s stock has flooded nearly 17% since its third-quarter earnings blew away Collapse Street expectations in October. However, Einhorn, one of Tesla’s most eminent bears, isn’t about to call it quits on what is turning into an increasingly high-priced sell trade.

Bloomberg reported that during an earnings telephone for Greenlight Capital Re Ltd, the hedge fund manager said that investors fool gotten too carried away with Tesla’s results. He added that that they command be “as good as it gets” for the firm because robust sales of pricier Facsimile 3 sedans are unsustainable.

Delivering more than 56,000 Model 3s to characters at an average selling price approaching $60,000 played a key role in plateful Tesla to report its third profitable quarter last month. Einhorn, who has held a shortened position in Tesla for over year now, claimed that demand for the heaps has now been exhausted.

“We believe this will be as good as it gets for the public limited company,” the hedge fund manager said on the earnings call. “We believe they’ve fagged most of the demand from customers who can afford the highest-priced versions of the Fabricate 3.”

Einhorn, who is perhaps best known for shorting Lehman Brothers in 2007 in the vanguard it went bankrupt, also warned that Tesla faces distinct other challenges. They include rising competition from organized automakers and regulatory scrutiny surrounding overly optimistic public communications that CEO Elon Musk made last year regarding Sport imitate 3 production figures. “Tesla is contending with a litany of competitive, regulatory, human-resources, vehicle-quality and capital-structure releases,” the hedge fund manager said.

Tesla’s better-than-expected results and resulting share price rally have seen some of the company’s other unexpectedly sellers run for cover, according to Ihor Dusaniwsky. In a tweet from Nov. 5, the head director at S3 Partners said short interest in the stock had declined by 940,000 allotments over the last week and by 1.4 million shares since Oct. 1.

Nonetheless, the analyst pointed out that short interest in Tesla remains peak at $11.16 billion and continues to attract inflows. That said, Dusaniwsky famed that bets against the stock don’t tend to have much of an impact on the stirring car maker’s share price.

“I am seeing a bit of short selling today, but in all objectivity, shorts do not substantially move Tesla’s  stock price — it is long exchange and buying that has the largest effect,” he tweeted. 

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