Tesla (TSLA) Stock: Big Short Investor Says Valuation Is Ridiculously High

TLDR

• “Big Short” investor Michael Burry says Tesla’s valuation is “ridiculously overvalued” in new Substack post
• Tesla’s P/E ratio exceeds 300 while S&P 500 average sits at 26
• Third quarter net income plunged 37% year-over-year to $1.4 billion
• Stock trades near all-time high of $479 despite slowing growth and margin pressure
• Wall Street analysts predict potential 15% decline from current price levels

Michael Burry just fired a shot at one of the market’s most popular stocks. The investor who predicted the 2008 financial crisis says Tesla is trading at absurd levels.

Tesla, Inc., TSLA

Burry published his thoughts on Substack Sunday night. His message was crystal clear about the electric vehicle maker’s stock price.

He called Tesla’s market cap “ridiculously overvalued” and warned that Elon Musk’s massive pay package would continue diluting shareholders. The company’s valuation stands near $1.5 trillion today.

This marks Burry’s second public battle with Tesla. He previously shorted $530 million of shares in 2021. That position lasted only months before he closed it out.

Tesla shares trade around $479 per share. The stock has climbed 70% over the past year. But year-to-date gains tell a different story at just 9%.

Warning Signs in Recent Earnings

The numbers from Tesla’s latest quarter paint a worrying picture. Net income crashed 37% compared to last year, landing at $1.4 billion.

Revenue grew only 12% to $28.1 billion. That beat analyst estimates of $26.37 billion. But earnings per share missed the mark at $0.50 versus expectations of $0.54.

Automotive revenue growth slowed to just 6%. These are modest gains for a stock priced at 300 times earnings.

Profit margins are shrinking under competitive pressure. Gross margin dropped from 19.8% to 18% year-over-year. Chinese competitors are flooding the market with new electric models.

Tesla’s U.S. market dominance is slipping too. The company held 41% market share in August, down from higher levels in previous years.

Valuation Questions Mount

Tesla’s price-to-earnings ratio tells the real story. At over 300, it dwarfs the S&P 500 average of 26 by more than tenfold.

Analyst price targets average $381 per share. That suggests the stock could drop 15% from current trading levels.

Burry isn’t the only skeptic. Short-seller Jim Chanos questioned Tesla’s valuation back in 2023. The debate over whether Tesla deserves premium pricing continues.

Musk is banking on future products to justify the valuation. Robotaxis and the Optimus robot represent his vision for the company. But both face fierce competition from established players like Waymo and Chinese robotics startups.

His compensation package requires Tesla to hit an $8.5 trillion market cap over ten years. That’s nearly twice Nvidia’s current value.

Burry criticized Tesla’s shifting focus in his post. He noted the “Elon cult” moved from electric cars to autonomous driving to robots as competition emerged in each space.

Current Market Position

Tesla delivered mixed third-quarter results that left Wall Street unimpressed. The stock barely moved after the earnings release.

Competition from Chinese automakers is intensifying. Tesla launched lower-priced models to counter the threat, but this strategy may squeeze margins further.

The robotaxi rollout helped push shares up 11% in 2025. Investors remain split on whether innovation or valuation matters more.

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