"Big Short"-Investor Burry on Tesla shares: Way too overvalued

• Michael Burry calls Tesla’s market cap “ridiculously overvalued”
• Investor criticizes annual shareholder dilution of 3.6 percent without buybacks
• Musk’s compensation package of up to $1 trillion will further exacerbate dilution

Burry criticizes dilution and Musk compensation

In late November 2025, Burry published a post on his paid Substack newsletter “Cassandra Unchained” on the so-called “tragic algebra” of stock-based compensation. Tesla served as a central example. According to CNBC, which viewed the newsletter, Burry criticized Tesla for diluting its shareholders by 3.6 percent annually without offering share buybacks.

Burry’s conclusion was clear: Tesla’s market capitalization is “ridiculously overvalued” – and has been for a long time. Musk’s recent shareholder approval of up to $1 trillion in compensation will further exacerbate dilution. At the shareholder meeting in November, the package received 75 percent approval – although the two largest proxy advisors, Glass Lewis and ISS, voted against it.

A swipe at the “Elon cult”

In addition to the valuation criticism, Burry also criticized Tesla’s strategy. He described Musk’s followers as an “Elon cult” that initially focused entirely on electric cars – until competition arose. Then they switched to autonomous driving until competitors appeared there too. Now everything is being put on robots – until the competition appears there too.

Burry did not disclose his own position in Tesla shares. However, in November he announced short bets against NVIDIA and Palantir via put options. As early as 2021, Burry bet against Tesla shares worth $530 million, but got out after a few months and described the commitment as a pure trade at the time.

Wall Street remains optimistic

While Burry warns, Wall Street has recently appeared bullish. At the end of November, Melius Research classified Tesla as a “must-own” – with reference to the progress in autonomous driving. Stifel also increased its price target and reiterated its buy recommendation.

Tesla dominated the U.S. electric vehicle market in August 2025, with a market share of around 41 percent, according to Cox Automotive. However, this share has declined in recent years as competitors bring more electric models onto the market. When it comes to robotaxis and humanoid robots – Tesla’s declared fields of the future – the company competes with Alphabet’s Waymo and the Chinese robotics start-up Unitree.

For Musk’s compensation package to be fully paid out, Tesla’s market value would have to rise to $8.5 trillion – about six times its current level.

D. Maier / editorial team finanzen.net

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