Michael Burry Drops the Mic on Tesla's Valuation: "Ridiculously Overvalued!"

TL;DR: Michael Burry, the sharp-witted investor from 'The Big Short,' is back to roasting Tesla, declaring its market cap "ridiculously overvalued." He's calling out significant stock dilution and accusing Elon Musk of constantly shifting the narrative – from EVs to autonomous driving to robots – just to keep the "cult" invested.

Meta: Michael Burry, the investor famed from 'The Big Short,' is once again calling Tesla's valuation 'ridiculously overvalued,' slamming its high dilution rate and Musk's shifting narratives towards robotics to prop up the stock.

Alright, folks, when Michael Burry, the guy Christian Bale played in 'The Big Short,' starts talking, you gotta listen. This man doesn't just whisper; he drops truth bombs like it's his job. And his latest target? None other than Tesla. He's not mincing words, calling Tesla's market capitalization "ridiculously overvalued" and has been for a good long time. He's basically saying, "This stock's got more air than my hair in the '80s!"

Burry, a trained neurologist who became an investment guru, recently shut down his hedge fund, freeing him up to speak his mind about the so-called AI bubble. And while he's got NVIDIA in his crosshairs, Tesla gets a special mention. He's talking about the "tragic algebra" of stock-based compensation (SBC), saying Wall Street often ignores it, but it's really just diluting shareholders. He says Tesla dilutes at about 3.6% per year with no buybacks, comparing it to Amazon at 1.3% and Palantir at 4.6%. That's like sharing your pizza, but someone keeps adding more dough instead of toppings!

The Elon Cult and Shifting Narratives

Then there's the big elephant in the room: Elon Musk's pay package. We've talked about it before – that massive ~$55 billion deal, then the pre-approved $29 billion, and then shareholders approved a new stock option package for Musk worth up to $1 trillion! Burry ain't impressed, seeing it as a guarantee of future value destruction for current holders. He says this creates a "massive overhang" on the stock, which is already trading at almost 300 times earnings. That's a high price for a company, even if it's got a charismatic leader.

But the real zinger from Burry? He points to Tesla's ever-shifting narrative. He tweeted, "[As an aside, the Elon cult was 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.]" Ouch! He's suggesting that as soon as competition heats up in one area, the focus just shifts to the next big thing. While you could argue Tesla's just innovating, Burry's implying it's a shell game to keep that valuation sky-high. He's got a point; the market does love a good story.

What’s Next

Michael Burry's critiques, while sharp, often highlight long-term risks that the market can ignore for extended periods. The ongoing debate around Tesla's valuation and its reliance on future tech narratives (like Optimus and Cybercab) will continue to be a central theme for investors. Shareholders will have to weigh the potential for groundbreaking innovation against the financial realities of dilution and market competition. The outcome of the Delaware Supreme Court's decision on Musk's compensation will also be a major factor.

So, if you're holding TSLA, you heard the man! The market can stay irrational longer than you can stay solvent. Just keep your eyes open and your investments diversified, baby. That's the real big short!