Tesla overvalued: Michael Burry, the investor best known for predicting the 2008 housing collapse, has turned his attention back to Tesla and he’s not holding back.

Michael Burry Says Tesla Is Still “Ridiculously Overvalued”

In a series of posts on his new Substack, “Cassandra Unchained,” Burry argues that Tesla remains deeply overvalued and that CEO Elon Musk’s newly approved $1 trillion pay package could significantly dilute existing shareholders over time, as per a report.

In his latest post, titled “Foundations: The Tragic Algebra of Stock-Based Compensation,” Burry outlines how large equity awards can erode what he calls “owner’s earnings,” as reported by Quartz.

He places Tesla at the center of this problem, saying the company’s market capitalization "Is ridiculously overvalued today and has been for a good long time," quoted Quartz.

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Why Burry Thinks Elon Musk’s $1 Trillion Pay Package Risks Heavy Dilution

The $1 trillion pay package, approved by Tesla shareholders in early November, depends on the company achieving ambitious production goals and a long-term valuation target of about $8.5 trillion, a figure tied to future robotaxi and humanoid robot businesses.

Burry argues that the package effectively directs the company to continue issuing large amounts of equity even as Tesla trades at a trailing P/E ratio near 300. For shareholders, he says, that means paying a premium for a “shrinking slice of the pie.”

Burry Criticizes the “Elon Cult” and Tesla’s Shifting Hype Narrative

He also takes aim at what he calls the “Elon cult,” criticizing shifting narratives around the company’s future. He says Tesla supporters were “all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now [are] all-in on robots – until competition shows up,” as quoted by Quartz.

According to Burry, each time a business line faces stronger rivals, the hype simply moves to the next frontier.

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Burry’s Past Tesla Short Position

Tesla is not a new target for Burry. In 2021, his then–Scion Asset Management disclosed bearish put options tied to more than 800,000 Tesla shares, a notional $534 million position at the time. Although he later said he closed the trade and downplayed its significance, he repeatedly warned investors to “enjoy it while it lasts.”

Burry Warns AI-Driven Stock Boom Resembles Past Market Bubbles

His latest Substack post does not disclose new Tesla positions, but it situates the company within his broader criticism of today’s market. Burry has argued that stock-based pay and circular deal-making are weakening shareholder value across major AI-related companies, comparing current market enthusiasm to previous bubbles.

Tesla Stock Up 14% in 2025 Despite Competition and Market Concerns

Tesla shares, meanwhile, are up about 14% this year, helped by optimism surrounding its robotaxi rollout and the company’s Optimus humanoid robot. It still holds roughly 41% of the US EV market, though that share has declined as more competitors enter the space. Despite a Dogecoin-related stumble early in the year, the stock remains up 11% in 2025.

Elon Musk Predicts Tesla Will Become the World’s Most Valuable Company

Musk has pushed back against critics and short sellers, predicting Tesla will eventually become the world’s most valuable company, as per a Business Insider report. While Musk's $1 trillion pay package, which was approved by Tesla shareholders last month, is based on the EV maker's market cap surging over the next decade to $8.5 trillion, almost double the valuation of Nvidia.

Robotaxis and Optimus Robot: Musk’s Vision vs Rising Competition

Competition is also rising in Tesla’s key growth areas. While Musk has said robotaxis and the Optimus robot represent the company’s future, Tesla faces rivals such as Google-backed Waymo in autonomous driving and Chinese robotics firm Unitree in the humanoid robot market.

FAQs

Why is Michael Burry criticizing Tesla again?
He believes Tesla is still massively overvalued and that its stock-based compensation is hurting shareholders.

What concerns Burry about Elon Musk’s $1 trillion pay package?
He thinks it could mean more equity dilution for existing shareholders.