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Michael Burry, famed for shorting the housing market during the Great Recession, recently made headlines by saying Nvidia Corp. (NASDAQ: NVDA) was wildly overvalued. His new target is Tesla Inc. (NASDAQ: TSLA), which he attacked yesterday, according to several media sources.
Burry described Tesla as “ridiculously overvalued” and brutally criticized the $1 trillion compensation package of CEO Elon Musk. He said Musk’s package would dilute investors by as much as 3.6%.
Burry’s attack on Nvidia had little effect on the stock, which has remained in bullish territory. The share price is up 34% this year, compared to the S&P 500’s advance of 17%.
Tesla’s stock is up 7% this year after a remarkably large sell-off following Musk’s fallout with President Trump and Tesla car sales begining to falter. Sales remain weak in the key markets of China, the United States, and the European Union. Sales have dropped as much as 40% in some EU countries. Tesla is no longer a dominant force in China, based on market share. In the U.S., overall sales of electric vehicles (EVs) have slowed because of the end of the $7,500 federal EV tax credit.
At its core, Burry’s argument is a common one among people who think the price is too high. Tesla has a market cap of $1.43 trillion, which ranks it 10th among all public companies.
Tesla trades on a future described by Musk as one in which the company dominates the self-driving car, artificial intelligence (AI), and robotics industries. In fact, Musk says there will be 10 billion humanoid robots sold by 2040, each with a price tag of $20,000 to $25,000. Tesla’s Optimus robot will be a leader in the industry.
Musk has an unusually aggressive plan for Tesla’s future revenue. Burry does not believe it.