Michael Burry of The Big Short fame, known for his prescient handling of the 2008 subprime mortgage crisis, has moved to clear the air after renewed headlines suggested he had revived a short position against Tesla (NASDAQ: TSLA).
Burry was responding to a Fortune article that implied he was once again betting against the electric-vehicle maker.
However, in an X post on December 2, Burry pushed back, saying he never stated he was shorting Tesla and that the article relied on an outdated and misreported figure from years ago.
What had been described as a $500 million short was, he clarified, only about $5 million at the time.
After correcting the record, Burry shifted focus to the issue he wanted to highlight: what he sees as serious problems in Tesla’s valuation and shareholder structure.
His main concern is dilution, noting that by his calculations Tesla increases its share count by roughly 3.6% each year without buybacks to offset the impact.
Tesla stock ‘dilution’
He argued that this steady dilution gradually erodes present value for long-term shareholders. And with CEO Elon Musk’s massive new pay package, valued at up to $1 trillion, on the table, he believes even more dilution is likely.
“Outgrowing dilution, for purposes of achieving maximum present value for an enterprise, is not easy.
Tesla dilutes its shareholders at about 3.6% per year, with no buybacks,” Burry claimed
Burry also reiterated his long-held view that Tesla’s valuation is overstretched. He framed the company’s shifting narratives, first electric vehicles, then autonomous driving, now robotics, as a pattern that appears whenever competitors begin catching up.
He extended his criticism to Palantir (NASDAQ: PLTR) as well, arguing that the company dilutes shareholders at an even faster rate and still produces no meaningful earnings once stock-based compensation is accounted for.
Burry also highlighted what he sees as an unusual imbalance between the number of billionaire insiders and the company’s annual revenue.
Disclaimer: The featured image in this article is for illustrative purposes only and may not accurately reflect the true likeness of the individuals depicted.
