Michael Burry slams Tesla as “Ridiculously Overvalued” in new warning to investors

Synopsis Michael Burry warns that Tesla is too expensive and says the company may face trouble because of stock dilution and big pay plans. His comments come as investors debate Tesla’s value, future growth, and Elon Musk’s decisions. Some experts agree with Burry, while others stay positive on Tesla, making the stock a major point of discussion on Wall Street. Michael Burry, the famous short seller from the 2008 housing crisis, attacked Tesla again and said the company is "ridiculously overvalued" in a new Substack post. Burry wrote that Tesla gives too much stock-based compensation and called it “tragic algebra.” He said Tesla dilutes its stock by 3.6% every year and does not do any stock buybacks, as reported by Yahoo Finance. Burry warned that Elon Musk’s $1 trillion pay package will dilute Tesla shares even more. He noted that Tesla shareholders recently approved this controversial pay package at the company’s meeting. Tesla stock dilution concerns Burry mocked Tesla’s changing focus areas, saying: “the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.” Burry did not reveal whether he is currently shorting Tesla stock. Last month, Burry took a big short position in Nvidia and Palantir using put options, which investors buy when they think a stock will fall. He then deregistered his hedge fund, Scion Asset Management, and started posting strongly on Substack. Short seller Jim Chanos told Yahoo Finance he also worries about Nvidia’s vendor financing, which is the same issue Burry complained about. Both Burry and Chanos have shorted Tesla in the past. Elon Musk has insulted Tesla short sellers before and even told Bill Gates to close his short position “soon.” Live Events Tesla valuation and Wall Street views At the same time, Wall Street firms are becoming more positive about Tesla, with Melius Research calling Tesla a “must own.” Stifel also increased its price target for Tesla, saying the company is strong in full self-driving (FSD) and robotaxis. Bloomberg reported that Burry has officially bet against Tesla again and repeated that the shares are “ridiculously overvalued.” Burry estimated again that Tesla’s stock compensation dilutes shareholders by about 3.6% per year, and he noted there are no buybacks to balance it. His new attack comes at a time when investors are already nervous about a possible AI bubble. Tesla is under heavy scrutiny over Musk’s $1 trillion pay award, which depends on performance milestones. Norway’s sovereign wealth fund, Norges Bank Investment Management, voted against Musk's pay package, saying it is too large and risky. Analyst Tareck Horchani said Tesla shares are “priced like an AI or robotaxi moonshot” and added “A lot has to go right, very quickly, to justify” the current valuation. Tesla shares have risen 6.5% this year, much lower than the 21% jump in the Nasdaq-100 Index, as cited by Bloomberg. Tesla is trading at nearly 200 times its expected profits for the next year, showing how stretched the valuation is. Market reaction to Burry’s comments was mild, as Tesla stock closed almost unchanged on Monday. On the Blue Ocean trading platform, Tesla stock was up about 1% on Tuesday morning in Singapore. FAQs Q1. Why did Michael Burry say Tesla is “ridiculously overvalued”? He said Tesla is overvalued because its stock gets diluted by heavy stock-based pay and Elon Musk’s $1 trillion package will dilute it even more. Q2. Did Michael Burry take a new short position against Tesla? Yes, Bloomberg reported that Burry has bet against Tesla again after raising the same dilution concerns. (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates. ...moreless (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) 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