Tesla stock warning: Why Michael Burry says EV maker is "ridiculously overvalued" and Musk’s $1 trillion pay package risks major dilution

Investor Michael Burry Warns Tesla Overvalued

Renowned investor Michael Burry has expressed concerns about Tesla's valuation, stating that the company remains "ridiculously overvalued" and warning of potential equity dilution for existing shareholders.

Why Burry Thinks Tesla Is Overvalued

• Tesla's market capitalization is heavily reliant on its stock-based compensation, which Burry believes is a major contributor to its overvaluation.
• The company's newly approved $1 trillion pay package, tied to ambitious production goals and a long-term valuation target of $8.5 trillion, could lead to further equity dilution.
• Burry argues that the package prioritizes issuing large amounts of equity, even as Tesla trades at a trailing P/E ratio near 300.

Burry Criticizes Tesla's Shifting Hype Narrative

Tesla has faced criticism for its shifting focus from electric cars to autonomous driving and now to robots. Burry argues that this constant shift in narrative is a hallmark of a company that is struggling to stay relevant.

The "Elon Cult" and Tesla's Market Hype

Burry has also taken aim at what he calls the "Elon cult," criticizing the unwavering support for Tesla's CEO and the company's stock. He argues that the hype surrounding Tesla's future prospects is unsustainable and will eventually lead to a market correction.

Competitors Emerge in Key Growth Areas

• Tesla faces increasing competition in its key growth areas, including autonomous driving and humanoid robots.
• Google-backed Waymo and Chinese robotics firm Unitree are among the companies challenging Tesla's dominance in these areas.

Elon Musk's Predictions vs Reality

Elon Musk has predicted that Tesla will become the world's most valuable company, with a market capitalization of $8.5 trillion. However, Burry believes that this is an unrealistic target and that the company's stock will eventually correct.

FAQs

• Why is Michael Burry criticizing Tesla again? He believes Tesla is still massively overvalued and that its stock-based compensation is hurting shareholders.
• What concerns Burry about Elon Musk's $1 trillion pay package? He thinks it could mean more equity dilution for existing shareholders.