'AI Bubble' Michael Burry Says Tesla Has Been "Overvalued for Quite Some Time"

Stock Issuance Without Share Buybacks
"Existing Shareholders' Stakes Diluted by 3.6% Annually"
Musk's $1 Trillion Compensation Package Also at Issue

Reuters Yonhap News

Michael Burry, the main character in the film "The Big Short" who recently argued that there is a bubble in artificial intelligence (AI), has now publicly criticized U.S. electric vehicle company Tesla, claiming it is overvalued.

According to Reuters and Fox Business, on December 1 (local time), Burry stated in his Substack newsletter "Cassandra Unchained" that "Tesla's market capitalization is, and has been for quite some time, absurdly overvalued."

He pointed out that Tesla is diluting existing shareholders' stakes by about 3.6% annually due to its ongoing stock issuances and lack of share buybacks. He also predicted that the large compensation package for Tesla CEO Elon Musk would further amplify the dilution effect.

Last month, Tesla shareholders approved a plan to grant Musk a compensation package worth up to 1 trillion dollars over the next 10 years. However, this is structured so that the package will only be realized if Tesla's market capitalization rises to 8.5 trillion dollars over the next decade. If the target is met, Musk's ownership stake is expected to increase from the current 15% to as much as 29%.

Burry is well known for predicting the collapse of the U.S. subprime mortgage market before the 2008 global financial crisis and making a fortune from it. Recently, he has been at the forefront of the AI bubble theory, arguing that major U.S. big tech companies such as Nvidia and Palantir are overvalued. He specifically cited excessive optimism surrounding the cloud infrastructure boom and accounting practices that overstate profits from large-scale hardware investments as key issues.

However, Fortune, a financial magazine, pointed out that optimism about Tesla remains dominant on Wall Street. About 75% of securities analysts continue to maintain "buy" or "hold" ratings on Tesla. For example, after Musk's compensation plan was approved, Dan Ives, Global Head of Technology Research at Wedbush Securities, reaffirmed his support for Musk's vision and leadership.

Meanwhile, Tesla closed at $430.14, down 0.01% from the previous session. During the session, the share price fell nearly 1% to $426 before rebounding. Yahoo Finance analyzed that Tesla's more than 50% plunge in European sales in November also contributed to the decline in its stock price.

This content was produced with the assistance of AI translation services.