Investors Brush Off Michael Burry’s View That Tesla Is ‘Ridiculously Overvalued’

Tesla Investors Brush Off Burry's 'Ridiculously Overvalued' Warning

The electric vehicle giant is riding high on its promising future growth prospects, with some investors confident that CEO Elon Musk's $1 trillion stock-based compensation plan will justify the company's lofty valuation. Famed short seller Michael Burry has cautioned against this optimism, warning that Tesla's management hasn't adequately informed shareholders about the impending share dilution tied to Musk's massive pay package.

Burry's concerns are centered around the impact of dilution on the company's profitability and value per-share basis. As new shares are issued for stock-based compensation, the market value is spread across a larger number of shares, pushing down earnings per share and potentially leading to selling pressure if management fails to counterbalance this with buybacks or rapid growth.

However, Tesla bulls argue that the company's long-term options outweigh the concerns about dilution. Musk's new pay package, like the one approved in 2018, is structured similarly to the previous plan, which didn't raise significant issues due to Tesla's meteoric expansion from $54 billion in 2018 to $650 billion in 2023.

"We'll see some dilution, but not much," said Noah Hamman, founder and CEO of EFT investor AdvisorShares. "The resulting valuation will be huge." Hamman noted that the company's broad technological footprint, including EVs, autonomous vehicles, robotaxis, energy storage, and software, means it can't be valued as a pure-play automotive company.

Matthew Tuttle, CEO of Tuttle Capital Management, also backed some of Burry's views, but disagreed with his criticism of Tesla's valuation. "Burry's core point is right: stock-based comp is not 'free' — it's equity issuance used to pay wages, and the bill shows up as dilution," he said.

Tuttle argued that Tesla's broad technological footprint means it can't be valued on conventional metrics for a long time if one of its options "hits at scale." This suggests that investors are willing to overlook Burry's concerns about dilution in favor of the company's promising growth prospects and diversified business model.

I'm not sure I fully agree with Michael Burry's view on this, . I mean, yeah, the dilution thing is a concern, but at the same time, I think Tesla is just so far ahead of the curve right now... they're working on some wild tech stuff that'll blow our minds in 10 years ️. And Elon's pay package is actually pretty standard for someone in his position - I mean, he's basically running a global company here! It's hard to argue with the fundamentals of Tesla's growth prospects, which are still pretty solid . Of course, Burry has a point about not being transparent enough from management, but at the end of the day, I think investors just see the big picture and are willing to take some risk for potentially huge rewards .

omg, tesla investors r so extra lol i mean, burry's like a genius or watever, but can we pls just chill? he's worried about share dilution, but musk's new pay package is like, super structured, u feel? and ppl are all like "we'll see some dilution, but not much" tbh, i think burry's right, but also, investors r so caught up in tesla's growth prospects they're overlooking the bigger picture like, this company's got techs, it can't be just valued on evs alone

idk why ppl r ignoring burrys warning ... like, yeah elon's new pay pkg is huge but so r the risks if management doesn't keep up w/ buybacks or innovation, shares might just tank & we all know how much money ppl put in i mean, tuttle says it's not about conventional metrics but what if one of those "options" fails? anyway, 650 billion to $54 bil is still wild

I'm kinda worried about Tesla, you know? I mean, Michael Burry is like a super smart guy who sees something that others don't, but at the same time, he's also been saying some pretty harsh things about Elon Musk's pay package... it's like, yeah okay, we get it, dilution could be a problem. But then again, some of these investors are all like "yeah, I trust Elon and Tesla's growth will save us" which just seems kinda reckless to me? Like, what if things don't go as planned? What if the company has to issue way more shares than expected because of Musk's pay package? Then where are we?

So, I'm reading this news and my mind is blown by how optimistic some Tesla investors are . They're thinking the $1 trillion stock-based compensation plan will make everything okay , even if it does lead to share dilution . Meanwhile, Burry's like a voice of caution , warning that this could impact profitability and value per-share basis .

But here's the thing: some people are still super bullish on Tesla because they think their long-term growth prospects outweigh the concerns . And honestly, it's hard to argue with that . I mean, Tesla has this amazing broad technological footprint – EVs, autonomous vehicles, energy storage, software... it's like a one-stop shop for all things electric .

So, while Burry's warnings are valid, it's clear some investors just can't get enough of Tesla's growth story . And that's why the market is valuing this company at $650 billion – it's seen something special .

I'm telling ya, this is some sketchy stuff . Elon Musk's $1 trillion pay package? Sounds like a setup for another Enron-style disaster . I mean, what's the real motive behind all these new shares? Just to line the pockets of Tesla's management team while they're supposed to be growing the company's value? Give me a break .

And don't even get me started on Burry's warnings about share dilution. This is exactly what he said would happen, but the investors are just ignoring him like he's some kind of crazy conspiracy theorist . I'm not saying Musk is bad or anything, but something doesn't add up here. It's all too convenient...