David Einhorn, manager of hedge fund Greenlight Capital, said electric-car maker Tesla Inc. is among the companies that remind of the dot-com bubble that collapsed and triggered a recession.
"Investors remain hypnotized by Tesla's CEO,” Einhorn said of billionaire Tesla founder Elon Musk, according to a transcript cited by CNBC. “The enthusiasm for Tesla and other ‘bubble basket’ stocks is reminiscent of the March 2000 dotcom bubble."
Tesla jumped as much as 80 percent in the five months since the November 8 presidential election, when Republican Donald Trump’s surprise victory triggered a broad rally in stocks. Tesla’s market value last month touched $53.8 billion, overtaking established rivals like General Motors Co. and Ford Motor Co. whose global operations produce millions of cars and trucks every year. Tesla delivered 76,230 cars in 2016, missing a target of 80,000.
"While we don't know exactly when the bubble pop, it eventually will," Einhorn said during the Greenlight Capital Re first-quarter conference call. The company is a reinsurance provider with an investment portfolio that Einhorn manages.
Greenlight has short positions in Tesla and “a group of perceived overpriced momentum driven securities that we refer to as the ‘bubble basket,’” according to a regulatory filing.
Traders have lost $3.7 billion on paper by making short sales in Tesla's soaring stock, eclipsing the combined losses of traders shorting Apple, Amazon.com and Netflix, Reuters reported.
Tesla plans to begin selling its first mass-market electric vehicle, the Model 3 sedan, this year. The Palo Alto, California, company will release its quarterly earnings report on Wednesday.
Einhorn’s biggest holding is General Motors, which he has urged to create a dual class structure to unlock more value for shareholders.
"GM trades at a significant discount to its intrinsic value despite the company's strong operating performance,” Einhorn said. “By placing what we believe are conservative valuations on each component, it's easy to get a value that is 27% to 79% higher than the current share price. We generally avoid public activism, but in this case management has misrepresented our idea, and we think our fellow shareholders deserve an opportunity of new way the merits of our plan for themselves."
GM panned Einhorn's idea, saying it would hurt the company's credit rating.