Michael Burry says Tesla is way too expensive, and has been for a long time. In a post shared Sunday on his new Substack, Burry called the company’s valuation “ridiculously overvalued,” citing its sky-high 209 times forward earnings. The critique was first picked up by Business Insider and didn’t stop there. Burry took direct aim at the way Elon Musk runs the company, warning that Tesla’s shareholder dilution is spiraling. Burry explained that Tesla waters down its stock by 3.6% every year through stock-based compensation, with no stock buybacks to help support its price. He said Musk’s $1 trillion compensation package, which shareholders approved last month, is only going to stretch that dilution further. “Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” the hedge fund manager wrote. Burry takes shots at Musk’s playbook and Tesla’s shifting tech promises In his post, Burry also criticized Tesla’s pattern of jumping from one futuristic tech promise to another. He pointed out how Musk fans were “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.” Despite unloading all this, Burry did not say whether he’s currently holding any short or long position in Tesla stock . Burry has shorted Tesla before. So has Jim Chanos, who also voiced concerns recently, especially around Nvidia’s vendor financing tactics. Burry’s message arrives just as Wall Street analysts have begun boosting their Tesla outlook. Last week, Melius Research called it a “must own,” largely due to its progress in chips and autonomy. The week before that, Stifel lifted its price target and reaffirmed a Buy rating, citing Tesla’s growth in robotaxi tech and full self-driving (FSD) capabilities. That positive momentum hasn’t changed Burry’s stance at all. Burry goes after Nvidia, says AI demand is a mirage Last month, Burry trended after he revealed new short positions in both Nvidia and Palantir, using put options, a decision that bets their stock prices will fall. Burry said Nvidia’s stock-based compensation has cost shareholders $112.5 billion, cutting their true earnings in half. He accused AI companies of hiding depreciation on hardware, claiming they’re exaggerating how long their GPUs stay useful to justify massive spending. Burry also suggested AI demand was artificially inflated, saying that many AI customers are basically funded by the same vendors selling them equipment, describing it as a circular financing scheme. The short seller believes these customers are propped up just long enough to keep the illusion of demand going. Nvidia quickly responded with a seven-page memo sent to Wall Street analysts, saying that Burry got the math wrong, mainly because he included RSU taxes, which inflated the costs. Nvidia claims the real buyback figure is $91 billion, not $112.5 billion, and also insisted their employee compensation is “consistent with peers,” and clarified that they are not Enron. Burry shot back: “I didn’t compare Nvidia to Enron.” Instead, he said the right comparison is Cisco in the late 1990s, when the company built more infrastructure than anyone needed, and saw its stock crash 75% once investors realized. Since early 2023, Nvidia’s stock has gone up 12 times. Right now, its market cap sits at $4.5 trillion, putting it on track as the fastest company ever to reach that value. None of that has softened Burry’s skepticism. Even with record earnings, he thinks the underlying business model is shaky, and the growth story won’t last. Burry’s record since 2008 has been all over the place. Yes, he called the housing crash early, which made his name. But since then, he’s been warning about collapse after collapse, often too early. That’s earned him the label “permabear.” He did make a smart move buying GameStop early, but then he sold before the meme stock boom in 2021. Sign up to Bybit and start trading with $30,050 in welcome gifts
