According to Business Insider, investor Michael Burry called Tesla “ridiculously overvalued” in a Substack post released late Sunday. He specifically criticized Elon Musk’s recently approved $1 trillion pay package, saying it will continue to dilute Tesla’s shares. Burry, who famously bet against the 2008 housing market, has also disclosed big bets against AI giants Nvidia and Palantir this year. He took a swipe at Tesla’s shifting focus, mocking the “Elon cult” for moving from electric cars to autonomous driving to robots as competition arrives. Tesla’s shares currently trade at over 250 times its earnings, and the stock is up 11% in 2025 so far despite Burry’s criticism.
Burry’s Bear Case
So, what’s Burry’s actual argument here? It’s not exactly new, but he’s packaging it with his broader skepticism of tech hype. He’s pointing out the basic math: Tesla’s market cap is astronomical compared to its actual earnings, and that $1 trillion compensation plan for Musk is a massive future liability for shareholders. Every time those stock options vest, it creates new shares, watering down the value of existing ones. And here’s the thing: he’s not wrong on the valuation multiple. Trading at 250x earnings is bonkers for an automaker, even one that says it’s a tech company. It’s a bet on a future that’s far from guaranteed.
The Shifting Narrative Problem
Burry’s aside about the “Elon cult” moving goalposts is probably his sharpest point. Look, Tesla *did* revolutionize EVs and built an unassailable lead. But now that legacy automakers are finally flooding the market, that lead is eroding—its US market share has fallen from its peak to about 41%. So the story pivots to self-driving. But then you’ve got Waymo and others actually running robotaxi services, while Tesla’s Full Self-Driving is still a “beta.” Now the big vision is the Optimus robot. Basically, whenever one pillar of the growth story faces reality, another, more futuristic one is emphasized. It’s a brilliant strategy to maintain a premium valuation, but it’s also incredibly risky. What happens if the robot timeline slips?
Is This 2021 Again?
This feels familiar, right? Burry shorted Tesla in 2021 to the tune of $530 million, only to close it out months later calling it “just a trade.” So is this just him talking his book for a new short position? Probably. But the context is different now. Back then, interest rates were zero and growth was everything. Today, money costs something. And Burry is framing this as part of a larger “everything bubble” in AI and tech. He’s lumping Tesla’s robotics/AI ambitions in with the Nvidia and Palantir frenzy he’s also betting against. It’s a macro call as much as a stock pick. The big question is timing. As any manufacturer knows, whether of cars or the rugged industrial panel PCs used to control them, hype can fuel a business for a long time before fundamentals finally matter. Tesla’s believers have been right for a decade. Burry’s bet is that the clock is finally ticking.
Musk’s Moonshot vs. Market Reality
On the other side, you have Musk’s undeniable track record and sheer ambition. That pay package is contingent on Tesla reaching an $8.5 trillion market cap—nearly double Nvidia’s current value. He’s literally betting the company’s future on robotaxis and robots. And the stock’s 11% rise this year shows many investors are still buying that vision, cheering the robotaxi rollout. But the competition in both EVs and autonomy is real and well-funded. Musk thrives on proving critics wrong, but Burry is highlighting the enormous gap between current profits and that imagined $8.5 trillion future. It’s the ultimate showdown between narrative and numbers. And honestly, both sides have valid points. One will just end up being very, very rich, and the other very, very wrong.
