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Investing.com -- "The Big Short" investor Michael Burry criticized Tesla in his Substack newsletter, calling the electric automaker "ridiculously overvalued" and highlighting concerns about shareholder dilution.
In his "Cassandra Unchained" blog post published Sunday, Burry estimated that Tesla dilutes its shareholders at approximately 3.6% per year without conducting any buybacks. He warned that CEO Elon Musk’s potential $1 trillion stock compensation package would further this dilution.
"Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time," Burry wrote.
The pay package could award Musk up to $1 trillion in stock over the next decade if the company meets specific performance milestones.
Burry also included a present value formula in his post, suggesting that Tesla’s stock is priced on fantasy, not fundamentals if valuations depend on perpetual high growth and near-zero discounting.
The investor has recently increased his criticism of technology companies, questioning Nvidia and Palantir Technologies, and criticizing the cloud infrastructure boom. He launched his newsletter in November after closing Scion Asset Management and returning capital to investors.
Burry gained fame for his successful short position against subprime mortgage securities during the 2008 housing market crash, which was documented in Michael Lewis’s book "The Big Short" and its film adaptation.