Tesla Valuation Faces Criticism From Michael Burry
Michael Burry said Tesla is overvalued and warned Musk's $1 trillion pay plan could accelerate shareholder dilution, raising concern about Tesla valuation.
KEY TAKEAWAYS
- Michael Burry argued Tesla's valuation was extreme, citing roughly 250-295 times earnings.
- He calculated about 3.6% annual shareholder dilution from stock-based compensation without buybacks.
- Shareholders approved a $1 trillion Musk pay plan that could grant about 12% of outstanding shares.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
Michael Burry criticized Tesla Inc.’s valuation in a Substack post on Nov. 30, 2025, saying investors are overpricing the company and warning that Elon Musk’s recently approved pay plan could further erode shareholder value.
Burry’s Valuation and Dilution Concerns
Burry described Tesla’s market capitalization as “ridiculously overvalued today and has been for a good long time.” He estimated the company trades at roughly 250–295 times earnings, a multiple far above legacy automakers and industrial peers. He faulted Tesla’s shifting strategic focus—from electric vehicles to autonomous driving to robotics—for inflating expectations.
Burry calculated that Tesla dilutes existing shareholders by about 3.6% annually through stock-based compensation combined with the absence of offsetting share buybacks. He compared this with roughly 1.3% dilution at Amazon and about 4.6% at Palantir. He framed stock-based pay as a permanent transfer of value from current shareholders to employees and management, emphasizing concerns about ongoing dilution.
Burry warned that the compensation program is likely to continue diluting Tesla’s shares, making shareholder dilution a persistent issue.
Musk Compensation Package and Legal Review
Tesla shareholders approved Musk’s $1 trillion compensation package in late November 2025. The plan is contingent on Tesla reaching an $8.5 trillion market capitalization within the next decade and meeting performance milestones that could award Musk up to about 12% of the company’s outstanding shares. This structure is central to Burry’s concerns about equity grants and governance.
The revised package follows a January 2024 Delaware chancery court decision that voided an earlier $56 billion award. The program is now under Delaware Supreme Court review to determine whether Tesla may implement the $1 trillion plan or must revert to a previously approved $29 billion alternative.
As of late November 2025, Tesla’s market capitalization stood at about $1.43 trillion, making it the world’s most valuable automaker. Musk held roughly 13% of the company’s outstanding stock, a concentration Burry cited as part of his concern over how future equity awards could reshape ownership stakes.
