One of the world’s most famous short sellers, Michael Burry, has once again caused a stir in the market with his comments about Tesla. Known for predicting the collapse of the US housing market in 2008, Burry claims that the value of Elon Musk’s company is “completely unrealistic”.
Business Insider first reported his latest comments, in which Tesla serves as an example of the “tragic algebra of stock compensation”.
According to the investor, the electric car manufacturer dilutes its share capital by 3.6 percent every year, while not buying back its own shares, which seriously affects the value of existing shares.
“Tesla’s market capitalization has long been ridiculously inflated,” Burry said. He was particularly critical of Musk’s compensation plans, including a package worth about a trillion dollars, which shareholders recently approved. According to him, such an arrangement further reduces investor stakes.
Burry also noted Tesla’s constant strategic changes.
“First the narrative was electric cars — until the competition arrived. Then autonomous driving — until the competition arrived there as well. Now the focus is on robots, until new rivals emerge,” he wrote. Although he is known for his big bets against Tesla, this time he did not reveal whether he currently holds a short position in the stock.
His exit comes just weeks after he opened significant short positions in Nvidia and Palantir via put options. Not long after, Burry formally shut down the Scion Capital fund and decided to publish market analysis directly on Substack.
A similar tone is maintained by Wall Street veteran Jim Chanos, who raised concerns with Yahoo Finance about Nvidia’s use of vendor financing to drive sales, a topic Burry regularly criticizes.
However, despite the warnings of two well-known short-sellers, the mood on Wall Street is going in the opposite direction. Analysts highlight Tesla’s progress in autonomous driving and the development of its own chips. Last week, Melius Research named Tesla a “must own,” while Stifel raised its price target and reiterated its buy recommendation, highlighting the FSD system and the potential of the robotaxi service.
Musk, who has been waging a battle with short-sellers for years, recently told Bill Gates to “close his short on Tesla soon”.
