When Burry Talks, People Listen

Michael Burry, the investor who became famous for betting against the housing market before the 2008 financial crisis, has a new target in his sights: Tesla Inc. (TSLA). On Tuesday, Burry took to X with a blunt assessment: "Tesla is ridiculously overvalued."

The timing wasn't random. Tesla had just shared consensus estimates for its fourth-quarter vehicle deliveries on Monday, and the numbers weren't pretty. Analysts are projecting 422,850 units for the current quarter, which represents a 14.93% drop from the previous quarter and a 15% decline compared to the same period last year.

Here's where it gets interesting. Tesla is now headed for its second consecutive year of declining annual vehicle sales. The consensus estimate sits at 1,640,752 units for the year, down 8.8% from just under 1.8 million global deliveries in 2024. And yet, Tesla remains the most valuable automaker on the planet with a market capitalization of $1.53 trillion, trading at 204 times forward earnings. For context, the auto industry's average price-to-earnings ratio is 17.47.

The Elon Cult and the Moving Target

Burry has been sounding the alarm on Tesla's valuation for weeks now. Earlier this month in his newsletter, he highlighted CEO Elon Musk's trillion-dollar pay package, warning it would lead to shareholder dilution. According to Burry, the company dilutes shareholders by 3.6% annually without any corresponding stock buybacks to offset the impact.

But his most memorable criticism was aimed at what he called the "Elon cult." As Burry put it: "As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up." Despite his harsh words, Burry clarified that he doesn't currently hold a short position against the company.

Something Unusual Happened

Fund manager and Tesla analyst Gary Black pointed out something strange about Tesla's approach this quarter. It was "very unusual" for the company to issue a press release with quarterly sell-side consensus estimates, he noted on X. "Obviously, someone at TSLA wanted the IR-derived consensus to be distributed as widely as possible," Black said. He expects fourth-quarter deliveries to land in the "420K range than the 445K range."

Tesla shares closed down 1.17% on Tuesday at $454.24 and declined another 0.35% in after-hours trading. Despite the recent criticism and disappointing sales projections, the stock continues to score high on momentum and quality metrics, with favorable price trends across short, medium, and long-term timeframes. Whether those trends can continue in the face of declining sales and sky-high valuations remains the trillion-dollar question.