A familiar figure, Michael Burry, has set his sights on Tesla once again, and this time, he’s not holding back.
Burry, who gained fame through his role in the “Big Short,” has used a popular Substack blog to express his concerns about Tesla’s valuation, stating that it has become somewhat fantastical.
His perspective hinges on Tesla’s declining growth, intensifying competition, and shareholder dilution stemming from CEO Elon Musk’s hefty $1 trillion compensation package.
While Burry has critiqued Musk before, his comments come at a crucial time as Tesla attempts to persuade investors that its future innovations—like robotaxis and humanoid robots—will drive growth.
For Burry, this shift feels more like a strategic pivot than genuine evolution.
Though Musk continues to make ambitious promises, Burry senses that companies are struggling to justify their inflated valuations.
In his latest critique, Burry also sounds the alarm over what he calls an AI-driven bubble affecting big-tech stocks.
He believes that Tesla’s valuation has long been disconnected from its real fundamentals. From an analysis perspective, the stock is currently trading at over 15 times estimated sales, which is significantly above the industry average.
Plus, earnings are a bigger concern; the stock trades at over 335 times projected GAAP earnings, which is also way higher than the sector norm.
- Late October 2025: Burry re-emerged in the market discussions, warning of a potential bubble and indicating that he would be active again after a pause.
- Early November: Reports showed his bearish positions on Nvidia and Palantir as he steered his focus on public commentary.
- Mid/late November: Nvidia responded to his criticisms, leading to some back-and-forth. Burry asserted he still retained positions in both stocks.
- Late November: He launched a Substack called ‘Cassandra Unchained’ to warn about AI-related market bubbles.
Moreover, Burry points out that Tesla has faced several quarters of dropping sales and disappointing deliveries— a dramatic turn from its previously strong performance that had supported its valuation.
- Q3 2025 (September): EPS: $0.50, Revenue: $28.1 billion.
- Q2 2025 (June): EPS: $0.40, Revenue: $22.5 billion.
- Q1 2025 (March): EPS: $0.27, Revenue: $19.34 billion.
- Q4 2024 (December): EPS: $0.73, Revenue: $25.71 billion.
At the same time, Burry believes that the dilution of Tesla stock is accelerating, which investors might not fully grasp just yet.
Adding to the uncertainty, he expresses doubt about Musk’s massive compensation package, arguing it could lead to more dilution and compromise the interests of existing shareholders as they bear the burden to fund Musk’s profits.
- Target market cap: Tesla would need to hit a staggering $8.5 trillion in valuation—nearly six times the value from 2025.
- Key operational aims: The plan outlines essential milestones for vehicle production, sales growth, and other critical performance indicators concerning long-term aspirations like robotaxis and robotics.
- 12% stock issuance: Musk’s compensation includes stock issued in phases based on performance milestones, leading to notable dilution.
- Amended compensation package: After legal challenges, the revised package replaced a previous $56 billion plan, raising stakes exponentially for the years ahead.
Burry also points to a shift in Tesla’s narrative, arguing that it has evolved from solely an electric vehicle manufacturer to now claiming to lead in self-driving technologies, only to pivot once more toward robotics as competition grows.
This sort of transition, he argues, is less about natural progression and more about a calculated strategy intended to maintain excitement amidst slowing core automotive growth.
Tesla remains a stock ripe for debate, with supporters and critics viewing vastly different businesses. Advocates assert that the high valuation is indicative of a bright future as a technology leader, while detractors argue it is grossly overvalued based on traditional metrics.
This ongoing tension has led renowned short-sellers to label Tesla an overhyped investment.
Musk himself has not overlooked the ongoing short-selling narratives and previously anticipated a “short burn of the century” back in 2018, an incident that eventually saw short-sellers lose significantly.
With a bit of bravado, Musk even sent a box of literal “shorts” to short-seller David Einhorn, highlighting the back and forth over trading strategies.
Ultimately, Musk argues that Tesla deserves its premium status due to its expansive vision beyond just electric vehicles, encompassing a broader technological agenda.
Despite the challenges, Musk remains optimistic, asserting that Tesla will become “the most valuable company on Earth,” while suggesting that skeptics fail to grasp the overarching vision.
