Investor Michael Burry, known for “The Big Short,” is now targeting Tesla, arguing the company is massively overvalued. Burry believes Elon Musk’s $1 trillion pay package will dilute shareholder value and warns that the market is paying bubble prices for companies like Tesla.

Burry’s latest Substack post highlights the negative impact of generous equity awards on shareholder earnings over time. He criticizes Tesla’s stock-based compensation plan and its potential $1 trillion value tied to ambitious production and market-cap targets.

Burry accuses Tesla of continuously shifting its narrative to stay ahead of competition, leading to inflated valuations. He argues that existing shareholders are paying a premium for a shrinking ownership stake due to the company’s high P/E ratio and continuous equity issuance.

Despite previous bearish positions on Tesla, Burry continues to express skepticism about the company’s valuation and growth prospects. He believes the market is overestimating the potential of companies like Tesla to grow exponentially without facing challenges or competition.

Burry’s critique extends beyond Tesla to highlight broader issues in the market, such as inflated valuations and shareholder value erosion. He warns that stock-based pay and circular deal-making are fueling a bubble in companies expected to grow consistently without setbacks.

Burry believes Tesla’s current valuation is unsustainable and that investors are buying into a myth of endless growth. He predicts that the company’s narrative will eventually be questioned, leading to a reevaluation of its value and prospects in the market.

Read more at Yahoo Finance: Michael Burry says Tesla stock is ‘ridiculously overvalued’