Tesla (TSLA) Stock: Michael Burry Calls Automaker Ridiculously Overvalued

TLDR

• Michael Burry labeled Tesla “ridiculously overvalued” in a recent Substack post
• Tesla trades at over 250 times earnings while recent Q3 results showed 37% drop in net income
• The company’s gross margin fell from 19.8% to 18% amid rising competition from Chinese automakers
• Burry previously bet against $530 million worth of Tesla shares in 2021 before exiting months later
• Analyst consensus suggests Tesla stock could face 15% correction from current levels

Michael Burry is back with another controversial call. The investor famous for predicting the 2008 housing crisis says Tesla is trading at levels that make no sense.

Tesla, Inc., TSLA

Burry posted his take on Substack late Sunday. He didn’t mince words about Elon Musk’s electric vehicle company.

This isn’t Burry’s first rodeo with Tesla. Back in 2021, he bet against $530 million worth of shares. He exited that position after a few months, calling it “just a trade.”

The stock currently trades around $479. That puts its market cap near $1.5 trillion. But here’s where things get interesting.

Tesla’s price-to-earnings ratio sits above 300. The S&P 500 average is 26. That’s more than ten times the market average.

The Numbers Tell a Different Story

Tesla’s third-quarter results came out October 22. Revenue hit $28.1 billion, beating analyst expectations of $26.37 billion.

But earnings per share came in at $0.50. Wall Street wanted $0.54. The stock barely moved after the announcement.

Net income dropped 37% year-over-year to $1.4 billion. That’s a sharp decline for a company trading at such high multiples.

Revenue growth slowed to 12% last quarter. Core automotive revenue only grew 6%. These aren’t the growth rates you’d expect from a stock priced for perfection.

Competition is eating into Tesla’s margins. Gross margin fell from 19.8% to 18% compared to last year. Chinese automakers are pushing into the market hard.

Tesla’s U.S. market share stands at 41% as of August. That number has been falling as competitors roll out more electric models.

The Debate Over Valuation

Burry isn’t alone in questioning Tesla’s price. Jim Chanos made similar comments back in 2023. The company trades at over 250 times earnings while traditional automakers trade far lower.

Analyst consensus puts the target price at $381. That implies a potential 15% drop from current levels.

Musk has big plans beyond cars. He’s betting on robotaxis and the Optimus robot. But those ventures face steep competition from companies like Google-backed Waymo and Chinese robotics firm Unitree.

The billionaire’s pay package depends on Tesla’s market cap reaching $8.5 trillion over the next decade. That’s nearly double Nvidia’s current valuation.

Burry took shots at Tesla’s pivot strategy too. “The Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots,” he wrote.

Tesla shares are up 11% in 2025 after investors cheered the robotaxi rollout. Year-to-date gains sit at just 9%. The stock has climbed 70% over the past 12 months.

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