Michael Burry renews bearish bet against Tesla, citing valuation and dilution risks

Michael Burry, the investor famed for predicting the 2008 housing market collapse, has taken a fresh short position against Tesla Inc., arguing that the electric-vehicle maker’s valuation has reached unsustainable levels.

According to a report from Fortune, which cited a post on his Substack newsletter, Burry described Tesla shares as “ridiculously overvalued” and warned that shareholder dilution remains an underappreciated risk—particularly as founder Elon Musk pursues a proposed $1 trillion compensation package.

Dilution concerns intensify around Musk’s pay plan

Burry estimated that Tesla’s stock-based compensation dilutes shareholders by roughly 3.6% annually, with no share buybacks in place to cushion the impact.

He specifically criticized the scale of Musk’s performance-linked pay proposal, arguing that it would further weaken existing shareholders’ positions.

The package has already divided investors, becoming a focal point in broader debates around Tesla’s governance, concentration of leadership, and key-person risk.

The world’s largest sovereign wealth fund, Norges Bank Investment Management, voted against Musk’s award, citing concerns about the package’s magnitude, the dilution it would create, and the lack of safeguards to reduce the company’s reliance on a single executive.

The move highlights that skepticism is no longer confined to outspoken short sellers.

Instead, mainstream institutional investors are increasingly questioning whether the compensation plan is aligned with shareholder interests.

Market nervousness over valuation and AI-driven expectations

Tesla’s valuation remains a central point of contention.

Tareck Horchani, head of prime brokerage dealing at Maybank Securities, said in a Bloomberg report that the stock is “priced like an AI or robotaxi moonshot,” reflecting expectations that stretch far beyond current fundamentals.

He noted that investors appear nervous about how aggressively Tesla is valued, given its financial performance.

“A lot has to go right, very quickly, to justify” the current pricing, Horchani said.

Tesla shares have climbed 6.5% so far this year, significantly lagging the broader tech rally that has pushed the Nasdaq-100 Index up 21%.

Even so, Tesla trades at nearly 200 times projected earnings for the next 12 months, based on data compiled by Bloomberg—an indication of how much future growth the market is already pricing in.

Burry’s latest move also echoes his earlier bearish stance on other high-valuation technology names.

He previously shorted Nvidia Inc., raising similar concerns about shareholder dilution.

His renewed focus on compensation structures comes as investors increasingly question whether an artificial-intelligence boom may be inflating valuations across parts of the technology sector.

Muted market reaction as Burry speaks directly to investors

Tesla’s stock showed little immediate reaction to the development, closing largely unchanged on Monday.

As of mid-morning Tuesday in Singapore, shares were up about 1% on the alternative trading platform Blue Ocean.

Burry disclosed the trade shortly after deregistering his firm, Scion Asset Management—a step that suggests he intends to use his Substack, Cassandra Unchained, as a platform to communicate directly with investors and influence debate around technology valuations.

For now, while his warnings have added to existing concerns about Tesla’s pricing and governance structure, the market appears to be taking a wait-and-see approach.