Michael Burry Calls Tesla "Ridiculously Overvalued" at 209× Forward Earnings and Warns of 3.6% Annual Stock Dilution

Source: CryptoNewsNet Original Title: Michael Burry said Tesla is “ridiculously overvalued” at 209× forward earnings and criticized its 3.6% annual stock dilution Original Link: Michael Burry has criticized Tesla’s valuation as “ridiculously overvalued” in a recent post on his Substack, citing the company’s sky-high 209 times forward earnings multiple.

Concerns Over Shareholder Dilution

Burry took direct aim at how the company is run, warning that Tesla’s shareholder dilution is spiraling. He 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. The recent $1 trillion compensation package approved by shareholders is only going to stretch that dilution further, according to Burry’s analysis.

Criticism of Shifting Tech Promises

Burry also criticized Tesla’s pattern of jumping from one futuristic technology promise to another. He pointed out how followers 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 his criticism, Burry did not disclose whether he currently holds any short or long position in Tesla stock, though he has shorted the company in the past.

Broader Concerns About AI Demand

Burry has also expressed skepticism about the broader technology sector. Last month, he revealed new short positions in both Nvidia and Palantir using put options. He claimed that Nvidia’s stock-based compensation has cost shareholders $112.5 billion, cutting true earnings in half.

Burry accused AI companies of hiding depreciation on hardware and exaggerating how long their GPUs stay useful to justify massive spending. He also suggested AI demand was artificially inflated, describing it as a circular financing scheme where many AI customers are funded by the same vendors selling them equipment.

Industry Response

Nvidia responded with a seven-page memo to Wall Street analysts, claiming Burry got the math wrong by including RSU taxes. Nvidia insisted the real figure is $91 billion, not $112.5 billion, and that their employee compensation is “consistent with peers.”

Burry countered by comparing Nvidia to Cisco in the late 1990s, when the company built more infrastructure than anyone needed and saw its stock crash 75% once investors realized the overextension.

Since early 2023, Nvidia’s stock has risen 12 times, with its market cap now at $4.5 trillion. However, Burry maintains that despite record earnings, the underlying business model is shaky and the growth story won’t last.