Michael Burry, the investor renowned for predicting the US housing market collapse featured in "The Big Short," has renewed his criticism of Tesla's market valuation through his recently launched Substack newsletter. The prominent investor argues that Tesla's current market capitalization represents a significant overvaluation that has persisted for an extended period.

Dilution Concerns Drive Valuation Critique

Burry's analysis centers on Tesla's practice of issuing shares to employees, which he believes distorts the company's true profitability and inflates its market value. According to his calculations, Tesla dilutes its shareholders by approximately 3.6% annually without implementing share buyback programs to offset this dilution.

In his note to Substack subscribers, Burry shared analytical charts demonstrating what he describes as "present value destruction" resulting from this level of shareholder dilution. He emphasized that ignoring employee stock compensation expenses creates misleading earnings figures and artificially inflates market valuations.

Musk's Compensation Package Amplifies Concerns

Burry specifically highlighted the recent shareholder approval of Elon Musk's compensation package as a factor that could exacerbate the dilution issue. The proposal, valued at substantial amounts, passed with approximately 75% support from voting shareholders despite opposition from proxy advisory firms Glass Lewis and ISS.

The investor warned that this approval signals the likelihood of continued share issuance under the compensation plan, further diluting existing shareholders' ownership stakes.

No Current Short Position Despite Criticism

Despite his harsh assessment of Tesla's valuation, Burry clarified through social media that he currently holds no short position against the company. When directly questioned by users on social platform X, he stated unequivocally: "I am not short."

This stance represents a change from his previous approach. Regulatory filings from May 2021 revealed that Burry had established a $530 million short position against Tesla, which he subsequently exited within several months.

Broader Technology Sector Patterns

Burry noted that Tesla's reliance on employee stock compensation is not unique within the technology sector. He identified Palantir and Amazon as other technology firms that similarly depend heavily on stock-based employee compensation, suggesting this represents a broader industry pattern that affects valuation assessments.

Market Performance Context

Tesla currently maintains a market capitalization of $1.43 trillion. The company's shares have gained more than 6% in 2025, though this performance trails the S&P 500's gains of over 15% during the same period. Burry's analysis comes as he transitions from managing his hedge fund Scion Asset Management to publishing investment commentary through his Substack newsletter, Cassandra Unchained, which costs $379 annually.

Tesla has officially confirmed the start of Cybercab production as part of its comprehensive 2025 achievements recap, with CEO Elon Musk declaring that 2026 will be "epic" for the electric vehicle manufacturer. The announcement came through a video highlighting the company's major milestones across electric vehicles, robotics, and sustainable energy initiatives throughout 2025.

Key 2025 Achievements and Milestones

Tesla's 2025 recap showcased significant progress across multiple business segments. The company successfully launched Full Self Driving (FSD) V14 trials and introduced robotaxi services in Austin and the San Francisco Bay Area, marking important steps in autonomous vehicle deployment. The Model Y maintained its position as the best-selling vehicle globally for another consecutive period.

Infrastructure and Energy Expansion

Tesla demonstrated substantial growth in its charging and energy storage infrastructure during 2025. The company's Supercharger network expanded by 18.00%, significantly enhancing charging accessibility for electric vehicle users. In the energy sector, Tesla installed over one million Powerwalls, their rechargeable home battery system, and unveiled the Megablock, a 20MWh battery energy storage system (BESS) in September.

The company also opened a Tesla diner in Hollywood, Los Angeles, expanding its brand presence beyond traditional automotive and energy sectors. These developments reflect Tesla's commitment to creating a comprehensive sustainable energy ecosystem.

Strong Q3 Financial Performance

Tesla's third-quarter financial results demonstrated a strong recovery trajectory. The company reported a 12.00% increase in revenue, reaching $28.10 billion compared to $25.18 billion in the same period the previous year. This growth marked a significant turnaround after two consecutive periods of revenue decline.

However, the earnings results missed analyst estimates, indicating mixed performance despite the revenue growth. The financial performance occurred amid ongoing sales challenges in Europe, attributed to increased competition from manufacturers like BYD and consumer sentiment factors.

Future Outlook and Strategic Initiatives

With Cybercab production now confirmed, Tesla is positioning for expanded autonomous vehicle offerings, though regulatory approvals remain pending for full operational deployment. The company anticipates receiving regulatory approvals for supervised FSD in Europe as early as February 2026, which could significantly expand its autonomous driving market reach.

Tesla plans to continue expanding its robotaxi rollout beyond the current Austin and San Francisco Bay Area markets. The company is also advancing its Optimus robot development, with leadership indicating substantial future revenue potential from this robotics initiative. These strategic initiatives position Tesla for continued growth across its diversified technology portfolio as it moves into 2026.