- sagi habasov
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- 5 Min Read
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- 10 months ago
Key Points
- After shorting Nvidia and Palantir, Michael Burry is now targeting Tesla
- Burry claims Tesla is “ridiculously overvalued” and warns of ongoing shareholder dilution
- He argues that Elon Musk’s compensation package and long-term valuation assumptions pose significant risks
Burry Expands His Short Strategy – This Time Targeting Tesla
After revealing short positions against Nvidia and Palantir in the past month, “The Big Short” investor Michael Burry is taking his bearish stance a step further — this time against one of Wall Street’s most high-profile companies: Tesla.
Burry, famous for predicting the subprime mortgage crisis, argues that Tesla is trading at a valuation he calls “extreme and fundamentally unjustified.”
According to him, the enthusiasm surrounding Tesla no longer aligns with the company’s financial foundation, and the market is overlooking major risks.
The New Blog Post: Dilution, Governance Concerns, and Unrealistic Expectations
In his Substack newsletter Cassandra Unchained, Burry laid out a pointed critique of Tesla.
He claims the company dilutes its shareholders at a rate of roughly 3.6% per year while avoiding any share buybacks — a pattern he says meaningfully erodes shareholder value over time.
He also cites the potential $1 trillion compensation package tied to CEO Elon Musk, warning that such an arrangement amplifies dilution and reduces long-term ownership for public investors.
According to Burry, if Tesla continues to rely on new share issuance to fund expansion, the dilution problem could grow much worse.
The EV Market Is Shifting — and Burry Believes Tesla Is Mispriced
Although Tesla remains a leading force in the EV industry, Burry argues that the competitive landscape has changed in ways the valuation does not reflect.
Demand is not infinite, production costs remain high, and Chinese manufacturers are rapidly gaining ground — all of which challenge Tesla’s long-standing dominance.
In such a landscape, he warns, pricing Tesla as if it is guaranteed to dominate the next decade sets the stage for a painful correction if growth slows or regulation tightens.
Wall Street Responds — and Opinions Are Split
Burry’s criticism has reignited debate among analysts and investors.
Some maintain that Tesla’s premium valuation is justified due to its potential in AI, robotics, energy storage, and autonomous systems.
Others side with Burry, arguing that the stock price has drifted far from the company’s current fundamentals.
This raises the broader question:
Is Tesla a car company? A tech company? Or perhaps a long-term dream without a solid financial anchor?
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