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Big Short Investor Bets Against Tesla
2 Dec
Summary
- Michael Burry believes Tesla's market value is significantly inflated.
- Burry warns Musk's compensation plan will further dilute shareholder value.
- He noted Tesla's evolving priorities as competition emerges.
Michael Burry, renowned for his prescient 2008 housing market predictions, has voiced strong doubts about electric vehicle maker Tesla's valuation. He described the company's current market capitalization as "ridiculously overvalued" on his new Substack account. Burry pointed to Tesla's high rate of shareholder dilution, exacerbated by stock-based compensation awarded to employees.
He specifically highlighted CEO Elon Musk's recently approved compensation plan, which could grant him a significant equity stake. Burry argues this massive payout, tied to rigorous performance goals, disproportionately benefits Musk at the expense of other shareholders. This bet against Tesla follows similar bearish positions Burry has recently taken against other major tech firms.
Beyond valuation concerns, Burry criticized Tesla's dedicated fanbase, suggesting their focus shifts as competition enters the market. Despite Burry's bearish outlook, a majority of Wall Street analysts maintain a positive rating on Tesla stock, indicating a divergence in market sentiment.
