Tesla stock slumped in the hours leading up to the company’s next earnings release after hedge fund manager David Einhorn reminded investors again why his firm is bearish on the company. He compared cult stocks in general to the dotcom bubble of the 2000s, lumping Tesla in with that category and stating that the cult stock bubble will pop. He just doesn’t know when.

Tesla Inc. TSLA einhorn
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David Einhorn speaks on conference call

Einhorn addressed various stocks on the conference call for Greenlight Capital Re’s first quarter earnings results. He manages a portfolio of investments for the reinsurance company, which is based in the Caymans. His comments on the conference call were very similar to what he said in his April 25 letter to investors of Greenlight Capital, although with a few additions.

“For the time being, investors remain hypnotized by Tesla’s CEO,” David Einhorn said, according to a transcript of the conference call. “We are skeptical that the company will be able to mass market its Model 3 at volumes and margins that justify the current valuation.”

The hedge manager reassured investors that the bubble surrounding cult stocks such as Tesla will pop. It just isn’t clear exactly when that will happen. He said that like in March 2000 when the dotcom bubble was going on, bulls were rejecting “conventional valuation methods for a handful of stocks that seemingly could only go up.” However, he noted that the bubble popped then, and the current cult stock bubble will pop eventually.

As bearish as he is on Tesla, he is extremely bullish on General Motors, which is his hedge fund’s biggest position. David Einhorn values GM at more than 27% higher than its current share price, according to his comments on the conference call today, which also echo the commentary from Greenlight Capital’s April 25 investor letter.

Tesla set to report earnings

Tesla is set to release its next earnings report after closing bell, although it isn’t the headline numbers investors are most interested in. CEO Elon Musk has said that they’re on track to start producing the Model 3 in July, so investors will be listening and reading carefully for any hint on what’s going on with that. If the company is still on track, then this should be the last earnings report before the car’s launch.

However, it has been cutting corners in an attempt to get the Model 3 onto the assembly lines in time, so someone will be saying “told ya so.” Either Musk was right and cutting out what many see as a key stage of the manufacturing process will turn out alright, or the naysayers will be right and a disaster is pending. Either way, we can be sure that sparks will fly.

Shares of Tesla stock fell by as much as 2.17% to $311.97 during regular trading hours.