Michael Bury of ‘Big Short’ fame hits out at Tesla after slamming AI valuation

Investor Michael Bury of “The Big Short” fame took aim at electric automaker Tesla in a blog post, saying the Elon Musk-led company is “ridiculously overvalued”, days after he expressed concern about the current AI boom.

Bury estimates that Tesla is diluting its shareholders at a rate of about 3.6% per year with no buybacks, and that Musk’s record-breaking pay package will continue the dilution.

“Tesla’s market capitalization is ridiculously overvalued today and has been for a long time,” Bury wrote in his substack newsletter Cassandra Unchained on Sunday.

The pay package could earn Tesla’s CEO as much as $1 trillion in stock over the next decade, provided Musk, already the world’s richest man, ensures the company achieves a series of milestones.

Tesla shares traded at about 209 times its forward earnings at the last close, above its own five-year average of 94. The S&P 500, meanwhile, trades at about 22 times its forward earnings, according to data compiled by LSEG.

Tesla did not immediately respond to a Reuters request for comment.

This isn’t Bury’s first appearance of a letdown against Tesla. Scion Asset Management announced a large bearish bet via options on Tesla in May 2021.

He later told CNBC in October 2021 that he was no longer betting against the company and that his position was just a trade.

Bury’s short position against subprime mortgage securities during the housing market crash is chronicled in Michael Lewis’ book “The Big Short” and its film adaptation.

Recently, Bury has stepped up criticism of technology heavyweights such as Nvidia and Palantir Technologies, questioning the cloud infrastructure boom and accusing major providers of using aggressive accounting to inflate profits from their massive hardware investments.

Bury launched ‘Cassandra Unchained’ in November, saying the paid newsletter was his “full focus” while he closed his hedge fund Sion Asset Management and returned capital to investors.