‘Big Short’ Investor Michael Burry Calls Tesla Stock ‘Ridiculously Overvalued’

Michael Burry, the legendary investor who predicted the 2008 housing crash, has publicly declared war on Tesla’s valuation. In a scathing post on his new Substack newsletter “Cassandra Unchained,” Burry called the electric vehicle maker “ridiculously overvalued” and took direct aim at what he calls the “Elon cult.”

The criticism comes at a precarious moment for Tesla. The company trades at roughly 209 times forward earnings, nearly ten times the S&P 500’s 22x multiple and more than double Tesla’s own five-year average of 94x. Meanwhile, Tesla’s actual car business is hemorrhaging customers across Europe and China while shareholders just approved a pay package that could hand CEO Elon Musk up to $1 trillion in stock over the next decade.

“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry wrote in his Sunday post, titled “Foundations: The Tragic Algebra of Stock-Based Compensation.”

Burry estimates Tesla dilutes shareholders at approximately 3.6% annually with no buybacks to offset the damage. The investor included a present value formula in his post suggesting Tesla’s stock is priced on fantasy rather than fundamentals.

The “Elon Cult” and Shifting Narratives

Perhaps the most devastating line in Burry’s analysis targets the ever-shifting justification for Tesla’s valuation.

“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,” Burry wrote.

The observation cuts to the heart of Tesla’s valuation puzzle. Every time one business line faces genuine competitive pressure, the narrative pivots to the next frontier, and the stock price comes along for the ride.

Tesla launched its robotaxi service in Austin this summer with a handful of Model Y vehicles. The Cybercab, a purpose-built autonomous vehicle without steering wheel or pedals, is scheduled for production in 2026. And the Optimus humanoid robot, announced in 2021, is supposed to enter internal use next year.

But as Burry points out, each of these markets now features serious competition. Waymo already completes over 250,000 paid trips weekly. Chinese robotics startups like Unitree are advancing rapidly. The “competition showing up” pattern continues.

Burry’s History With Tesla

This is not Burry’s first battle with Tesla. In May 2021, his hedge fund Scion Asset Management disclosed bearish put options on 800,100 Tesla shares, a notional bet worth approximately $534 million at the time.

While Burry was posting on social media that Tesla investors should “enjoy it while it lasts,” the stock continued climbing. He closed the position by October 2021, telling CNBC it was “just a trade” and that the media had overhyped its significance.

The experience illustrates the challenge of betting against a stock driven by sentiment rather than fundamentals. Tesla bulls have proven remarkably resilient, pushing shares up roughly 11% in 2025 despite the company’s operational struggles.

Burry is not currently disclosing fresh Tesla options, though his recent SEC filings reveal approximately $1.1 billion in put options against Nvidia and Palantir, suggesting he sees similar overvaluation across the AI trade.

The $1 Trillion Pay Package Problem

Burry’s dilution concerns center on Musk’s compensation package, which shareholders approved last month despite opposition from major institutional investors and proxy advisory firms.

The package could deliver Musk up to $1 trillion in stock over the next decade, contingent on Tesla hitting extraordinarily ambitious milestones: growing market capitalization to $8.5 trillion (nearly double Nvidia’s current value), expanding annual operating profit to $400 billion, and producing 1 million robotaxis and 1 million Optimus robots.

Norway’s sovereign wealth fund, Tesla’s sixth-largest external investor, voted against the plan. Glass Lewis estimated that the entire S&P 500 combined paid all its CEOs about $9 billion last year. Musk’s package works out to roughly $8.8 billion annually.

Tesla shares traded around $430 on Monday, down slightly from November’s year-to-date high of $474.07.

EVXL’s Take

Michael Burry naming his newsletter after Cassandra, the Greek prophet cursed to speak truth that no one believes, is fitting. We have been documenting exactly what he describes for months.

When we covered Tesla’s global sales crisis deepening with European registrations down 48.5% just days ago, we noted the disconnect between collapsing fundamentals and elevated stock prices. When shareholders approved Musk’s $1 trillion payday in November, we highlighted how the vote came on the same day October European sales data revealed catastrophic declines.

The pattern Burry identifies, of pivoting from one narrative to the next as competition arrives, perfectly describes the post-tax credit cliff Tesla. The core EV business faces unprecedented pressure after the September 30 federal credit expiration. So the story has shifted to robotaxis, then to Optimus, each time keeping valuations elevated while the underlying car company struggles.

Burry’s 2021 Tesla short ended badly. The stock defied fundamentals then, and it may defy them again. But his central thesis is hard to argue with: a company trading at 209 times earnings with declining vehicle sales and 3.6% annual dilution is priced for perfection that may never arrive.

What do you think about Burry’s Tesla critique? Is the “Big Short” investor right this time, or will the Elon cult prove him wrong again? Share your thoughts in the comments below.