Investor Michael Burry has launched a scathing critique of Tesla, labeling the electric vehicle maker as "ridiculously overvalued" in a recent Substack post. Burry pointed out that Tesla trades at 209 times forward earnings, with an annual stock dilution of 3.6% due to stock-based compensation, exacerbated by Elon Musk's $1 trillion compensation package approved by shareholders last month.
He criticized Tesla's shifting focus from electric cars to autonomous driving and now to robotics, calling it a pattern of jumping from one futuristic promise to another as competition intensifies. Burry also targeted Nvidia, alleging that AI demand is artificially inflated through circular financing schemes and comparing it to Cisco's 1990s bubble. Nvidia responded with a memo disputing his claims, but Burry remains skeptical.
This isn't Burry's first bearish call on Tesla; in 2021, he shorted $530 million worth of Tesla shares before exiting. Recent Tesla Q3 results showed a 37% drop in net income to $1.4 billion and gross margins falling from 19.8% to 18%, despite revenue beating expectations at $28.1 billion. Analyst consensus suggests Tesla stock could face a 15% correction from current levels, with competition from Chinese automakers eroding its U.S. market share.
Burry's warnings come as Wall Street analysts have been boosting Tesla outlooks, citing progress in chips and autonomy, but his stance remains unchanged, reflecting his reputation as a "permabear" since predicting the 2008 housing crash.
