He highlighted Tesla’s 3.6% annual dilution and Elon Musk’s massive pay package as prime examples. Burry, known for predicting the 2008 crash, believes these accounting practices mask true costs, urging investors to scrutinize tech valuations. Legendary investor Michael Burry has slammed Tesla and tech giants for diluting shareholder value through stock-based compensation, arguing it’s unfairly excluded from earnings.
Legendary investor Michael Burry has targeted Tesla and major technology companies for their widespread use of stock-based compensation, arguing that the practice unfairly dilutes shareholder value while being improperly excluded from earnings calculations.
Burry stated that Tesla dilutes its shareholders at approximately 3.6% annually through stock-based compensation without offering buybacks to offset the impact, according to his recently launched Substack newsletter “Cassandra Unchained. Burry warned that Tesla CEO Elon Musk’s trillion-dollar compensation plan, which received 75% shareholder approval, would result in continued dilution for existing investors. The 2025 pay plan could potentially give Musk hundreds of millions of additional shares, increasing his Tesla stake to 29% from the current 15% if he meets rigorous performance goals. The subscription-based newsletter, priced at $379 annually, has focused heavily on his concerns about artificial intelligence valuations and technology sector accounting practices. Tesla shares traded around $426 following Burry’s commentary, representing a year-to-date gain of over 6% despite the investor’s bearish assessment.
Burry, who gained fame for predicting the 2008 housing market crash as chronicled in “The Big Short,” launched his paid Substack after closing his hedge fund Scion Asset Management in November. The investor described Tesla’s market capitalization as having been excessively valued for an extended period. Burry identified Palantir and Amazon as other prominent technology companies that dilute their shares through employee-based compensation. He reinforced his position by citing Warren Buffett’s perspective on the matter, quoting the Oracle of Omaha’s question about stock-based compensation being treated as anything other than a tangible expense: “What else could it be — a gift from shareholders?