Tesla (TSLA) Stock: Michael Burry Shorts EV Maker Over Valuation Concerns

TLDR

• Michael Burry disclosed a short position on Tesla, calling the stock “ridiculously overvalued” at 200x forward earnings
• Annual stock compensation dilutes Tesla shareholders by 3.6% with no buyback program to offset losses
• Musk’s $1 trillion pay package could issue 300 million new shares, raising institutional investor concerns
• Stock trades at $428.59, trapped between $400 support and $440 resistance with declining volume
• France sales plunged 57.8% in November while competitors gain ground in European markets

Michael Burry took a short position on Tesla. The investor who predicted the 2008 financial crisis shared his bearish stance through his Substack newsletter.

Tesla, Inc., TSLA

Burry describes Tesla as “ridiculously overvalued.” The company trades at nearly 200 times its projected 12-month earnings. That multiple towers above most technology companies.

The short position focuses on dilution issues. Tesla’s stock-based compensation reduces shareholder value by roughly 3.6% annually. The company runs no buyback program to counter this effect.

Elon Musk’s compensation plan compounds the problem. The proposed $1 trillion package could generate more than 300 million new shares. Existing shareholders would see their ownership stakes shrink even further.

This marks Burry’s second major tech short. He previously bet against Nvidia citing similar dilution concerns. His pattern targets high-valuation companies with aggressive stock compensation structures.

Institutional Pushback Grows

Norges Bank Investment Management rejected Musk’s pay proposal. The Norwegian sovereign wealth fund manages over $1.7 trillion in assets. Their vote signals mainstream investor skepticism.

The fund cited three main issues: package size, shareholder dilution, and over-reliance on Musk. When the world’s largest wealth fund votes no, other institutions pay attention.

Tesla’s year-to-date performance lags badly. Shares gained just 6.5% while the Nasdaq-100 jumped 21%. The underperformance raises questions about growth expectations baked into the price.

Stock Faces Technical Challenges

Tesla closed at $428.59 on December 2. The price oscillates within a tight $400 to $440 range. Recent weeks show declining trading volume compared to October highs.

Technical indicators paint a neutral picture. The RSI sits in the mid-50s, showing no clear directional bias. The 50-day moving average hovers near $418 while the 200-day average rests around $375.

Traders watch two key levels. A breakout above $440 could push shares toward $460 or $480. A drop below $400 might trigger selling down to $375 or lower.

European Sales Weaken

Tesla’s French registrations collapsed 57.8% year-over-year in November. The company recorded just 1,591 units. For the full year, French sales are down 33%.

The broader French auto market declined only 4.9%. Tesla’s losses far exceed the industry average. BYD, Volkswagen, and Stellantis continue capturing market share across Europe.

Burry recently deregistered Scion Asset Management. The move allows him to speak directly to markets through his newsletter. His public commentary shapes debates around tech stock valuations.

Monday’s market reaction stayed calm. Shares closed essentially flat and traded up about 1% on alternative platforms Tuesday morning.

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