Burry estimated that Tesla dilutes its shareholders at about 3.6% per year with no buybacks, and Musk’s record-breaking pay package will continue the dilution.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry wrote in his Substack newsletter ‘Cassandra Unchained‘ on Sunday.
The pay package could get the Tesla CEO as much as $1 trillion in stock over the next decade, provided Musk, already the world’s richest man, ensures the company achieves a series of milestones.
Tesla’s stock traded around 209 times its forward earnings as of last close, well above its own five-year average of 94. The S&P 500, meanwhile, trades at around 22 times its forward earnings, according to data compiled by LSEG.
Tesla did not immediately respond to a Reuters request for comment.
The bearish view against Tesla is not Burry’s first. Scion Asset Management disclosed a large bearish bet via options on Tesla in May 2021.
He later told CNBC in October 2021 that he was no longer betting against the company and that his position was just a trade.
Burry’s short position against subprime mortgage securities during the housing market crash was chronicled in Michael Lewis’s book “The Big Short” and its film adaptation.
Recently, Burry has stepped up criticism of technology heavyweights such as Nvidia and Palantir Technologies, questioning the cloud infrastructure boom and accusing major providers of using aggressive accounting to inflate profits from their massive hardware investments.
Burry launched ‘Cassandra Unchained’ in November, saying that the paid newsletter had his “full attention” after he closed his hedge fund Scion Asset Management and returned capital to investors.
