“The Big Short” investor Michael Burry is taking fresh aim at Tesla $TSLA ( ▼ 0.2% ) , saying the company’s market cap has been “ridiculously overvalued” for “a good long time.” In a new Substack post, he argues that investors aren’t properly accounting for the “tragic algebra” of stock-based compensation, which he says masks the true economic cost by treating it as a noncash expense even though it still dilutes shareholders.
Burry points to CEO Elon Musk’s massive compensation package, which he says effectively guarantees continued dilution. He estimates Tesla’s share count will rise about 3.6 percent per year without buybacks, a pace far above Amazon $AMZN ( ▲ 0.87% ) at 1.3 percent and closer to Palantir $PLTR ( ▲ 4.55% )
at 4.6 percent. Ignoring that compounding effect, he argues, leaves investors with an overly flattering picture of future profitability.
Tesla did not immediately respond to a request for comment.