Prominent investor Michael Burry, famed for predicting the 2008 housing crash, has placed a bet against Tesla Inc., declaring the electric vehicle maker's shares are "ridiculously overvalued." His criticism extends to founder Elon Musk's proposed US$1 trillion compensation package, which he argues would significantly dilute existing shareholders.
Burry's Bearish Thesis on Tesla and Tech
According to a report by Fortune, which cited a post on Burry's Substack newsletter, the investor estimates that Tesla's stock-based compensation plans dilute shareholders by approximately 3.6% annually. He noted this erosion is not offset by share buybacks. Burry did not respond to requests for comment from Bloomberg News.
This move against Tesla continues Burry's skeptical stance toward highly valued technology stocks. It mirrors his earlier short position against chip giant Nvidia Corp., where he raised similar alarms about dilution. His public warnings come as market participants express growing anxiety about a potential bubble in artificial intelligence stocks, with his focus on compensation structures adding fuel to those concerns.
Institutional Pushback and Valuation Worries
Tesla is already facing intense scrutiny from institutional investors over the scale of Musk's proposed award, which is tied to ambitious performance milestones. The plan's potential for dilution and the company's heavy reliance on its CEO have become key points of debate.
Norges Bank Investment Management, the world's largest sovereign wealth fund, has already voted against the pay package. It cited worries about its enormous size, the resulting shareholder dilution, and insufficient measures to reduce Tesla's dependence on Musk. This opposition signals that criticism is spreading beyond vocal short sellers like Burry to mainstream, long-term asset managers.
Market analysts echo the valuation concerns. Tareck Horchani, head of prime brokerage dealing at Maybank Securities, observed that Tesla's shares are "priced like an AI or robotaxi moonshot." He added, "The market's clearly nervous about how stretched Tesla's valuation is versus fundamentals. A lot has to go right, very quickly, to justify it."
Burry's New Platform and Market Reaction
Burry, whose foresight was chronicled in the book and film "The Big Short," revealed this trade shortly after deregistering his investment firm, Scion Asset Management. This move suggests he intends to use his Substack platform, Cassandra Unchained, to communicate directly with the market and influence discussions around technology stock valuations.
Despite the high-profile criticism, the immediate market reaction has been muted. Tesla's stock showed little change at the close of trading on Monday, December 2, 2025. In early alternative trading on Tuesday, it was up only about one percent on the Blue Ocean platform.
Year-to-date, Tesla's performance has lagged behind the broader tech index, with shares gaining 6.5% compared to the Nasdaq-100 Index's 21% rally. The stock currently trades at nearly 200 times its projected profits for the next twelve months, according to Bloomberg data.
