Michael Burry, widely recognized for his cautious stance on Tesla, Inc. (NASDAQ: TSLA), recently confirmed that despite his critical perspective, he currently does not hold a short position on the company’s stock. This clarification arrived as anticipation builds around Tesla’s forthcoming fourth-quarter vehicle sales results, and amid ongoing scrutiny of the company’s lofty valuation metrics.
Characterizing Tesla's Valuation
Burry has persistently expressed concern regarding Tesla’s market valuation, describing it as “ridiculously overvalued.” His remarks followed Tesla’s recent disclosure of fourth-quarter vehicle sales estimates, which some analysts regard as conservative relative to prior investor expectations. Burry’s fundamental critiques emphasize the disconnection between Tesla’s stock price and traditional valuation indicators present within the automotive and technology sectors.
Two primary issues stand out in Burry’s assessment:
- Shareholder Dilution: Burry points to Tesla’s use of equity-based compensation as a source of dilution, estimating it reduces existing shareholders’ stakes by roughly 3.6% annually. Compounding this is the absence of stock repurchase programs that might otherwise mitigate such dilution.
- CEO Compensation Package: Burry has been critical of Elon Musk’s extensive $1 trillion performance-based remuneration scheme. He argues this structure incentivizes achievement of market capitalization milestones over sustainable profitability, which may not align with the interests of long-term shareholders.
In addition to these financial factors, Burry has noted the influential role of Tesla’s vocal and loyal investor base—often described as an “Elon cult.” In early December statements, he observed that this group has shifted enthusiastic support through successive priorities: from electric vehicles to autonomous driving technology, and now to robotics. Each transition, he suggested, reflects a tendency to embrace Tesla’s strategic vision until emerging competition challenges the narrative.
This acknowledgment of Tesla’s unique investor fervor could help explain why Burry, despite his bearish views, has opted not to short the stock at current prices. When questioned early Wednesday about any short positions in Tesla, his response was unequivocal: “I am not short.”
Burry’s Investment Focus Beyond Tesla
While Tesla often features in Burry’s commentary, his active investment capital is presently directed elsewhere. Since converting Scion Asset Management into a private family office in late 2025, Burry has disclosed through his Substack newsletter, "Cassandra Unchained," a strategy concentrating on bearish positions within the broader artificial intelligence sector.
His current portfolio includes significant put option holdings on companies such as NVIDIA Corp. (NASDAQ: NVDA) and Palantir Technologies, Inc. (NASDAQ: PLTR). Burry’s rationale involves skepticism about these companies’ reported expenses, particularly regarding asset depreciation, which he believes may be understated to present more attractive financial performance.
Strategic Caution with Tesla
Burry’s reluctance to short Tesla, despite his views on its valuation and governance, signals a tactical approach to trading that prioritizes timing alongside fundamental conviction. He recognizes that Tesla’s valuation dynamics, amplified by a passionate investor community, might sustain elevated stock prices for extended periods, diverging from traditional investment logic.
This situation underscores the complexity of market behaviors where valuation assessments alone do not suffice to justify immediate trading actions. Burry’s position reflects a balance between acknowledging Tesla’s challenges and respecting market momentum driven by investor sentiment.
At the time of publication, Tesla’s stock was trading at approximately $453.03, marking a modest decline despite a broader gain exceeding 40% over the previous six months. The stock’s near-term trajectory is likely to be influenced by upcoming vehicle sales data and investor interpretations of Tesla’s strategic positioning amid intensifying competition.
Key Points:
- Michael Burry confirms he does not currently hold a short position in Tesla stock.
- Burry criticizes Tesla’s valuation as “ridiculous,” highlighting shareholder dilution and CEO pay as key concerns.
- Elon Musk’s performance-based compensation is viewed as incentivizing market cap milestones over sustainable profits.
- Burry’s bearish investments are currently focused on AI-related companies like NVIDIA and Palantir.
Risks and Uncertainties:
- Potential ongoing shareholder dilution of approximately 3.6% annually due to Tesla’s equity compensation structure.
- Uncertainty around the impact of Elon Musk’s $1 trillion pay package on long-term shareholder interests.
- Market momentum driven by Tesla’s devoted investor base could sustain high valuations despite fundamental concerns.
- Upcoming Tesla vehicle sales figures may significantly influence stock price volatility and investor sentiment.