'Not Short On Tesla Shares': Michael Burry Says After Calling Elon Musk's EV Firm 'Ridiculously Overvalued'

Famous investor Michael Burry has sparked a debate over Tesla shares, questioning the electric vehicle maker’s lofty valuation. The investor, best known for predicting the US housing market collapse portrayed in the book and the film ‘The Big Short,’ said that companies such as Tesla appear far less profitable once the true cost of issuing shares to employees is properly considered. In a note to subscribers of his new paid Substack account, Burry said ignoring this expense distorts earnings and inflates market value.

“Tesla’s market capitalisation is ridiculously overvalued today and has been for a good long time,” wrote Burry.

He added that Tesla regularly issues new shares at a pace that erodes shareholder value over time. According to his analysis, the company “dilutes its shareholders by about 3.6% per year, with no buybacks.” Burry shared a chart with subscribers, which he said “shows the kind of present value destruction that this level of dilution can impart.”

Though Burry described Tesla as overvalued, he said he has no short position. The investor was asked about this by a user on X. He said, “I am not short.”

According to a CNBC report, Burry also pointed to the recent shareholder vote approving Tesla CEO Elon Musk’s $1 trillion compensation package as a development that could worsen the situation. He said the approval signals continued dilution, as more shares are likely to be issued under the plan. The proposal passed with the support of about 75% of voting shareholders, despite opposition from proxy advisory firms Glass Lewis and ISS.

“With recent news of Elon Musk’s 1 trillion dollar pay package, dilution is certain to continue,” Burry wrote.

Tesla’s market capitalisation currently stands at $1.43 trillion. Its shares have risen by more than 6% so far in 2025, while the S&P 500 has gained over 15% during the same period, according to CNBC.

Burry noted that overcoming dilution is challenging for companies and said Tesla is not alone. He highlighted Palantir and Amazon as other technology firms that rely heavily on employee stock compensation.

Though he is not shorting Tesla at present, Burry has bet against the stock in the past, according to Business Insider. A regulatory filing in May 2021 showed he had built a $530-million short position, which he later exited within a few months. Burry is not alone among The Big Short cohort. Danny Moses, a former trader at Steve Eisman’s FrontPoint Partners, has also previously bet against Tesla but closed his position in 2024, saying it is extremely difficult to short a stock that is not trading on fundamentals.

Burry launched his Substack, Cassandra Unchained, late last month after deregistering his hedge fund, Scion Asset Management. According to CNBC, the newsletter costs $379 a year.