Michael Burry Criticizes Tesla Valuation and Musk Equity Plan

Key Points

Michael Burry has publicly questioned Tesla’s valuation again, this time focusing on how much the company increases its share count through stock-based pay. In a recent post, he said Tesla raises the number of outstanding shares by more than 3% a year and does not reduce that figure through buybacks. That means shareholders own a smaller percentage of the company over time, even as the business expands.

He also pointed to the equity compensation plan for Elon Musk that shareholders recently approved. The award is tied to financial and operational targets and adds new shares once those targets are met. Burry said the size of that program contributes to the increase in total shares.

Tesla programs referenced by Burry

Burry noted that Tesla now works on driver-assistance software and robotics in addition to electric vehicles. He said companies in multiple regions are developing similar technology. He suggested that these efforts should be monitored through reported financials rather than product announcements. Burry did not say whether he currently holds Tesla shares.

Revenue performance and share structure

Tesla has reported year-over-year revenue gains from vehicles, energy products and services. Profit figures have been uneven, and do not match the pace of the company’s market capitalization. The company has more than 3.1 billion shares in circulation. Equity awards remain a regular part of compensation and increase the number of shares over time. Tesla has not carried out buybacks to offset dilution.

Tesla earns subscription revenue from software upgrades, though vehicles and hardware remain the largest contributors to results. Investors reviewing the company look at how those additional products appear in reported earnings.

Program spending and dilution impact

The company continues to invest in automation-related technology and energy systems. Those costs are recorded while share issuance continues, and both items affect financial reporting. Market observers review:

• Cash required for development

• Production expenses in each product category

• Profits measured against the growing share count

This reporting-based approach monitors how earnings support ownership on a per-share basis.

Differences in coverage from research desks

Not all firms analyzing Tesla draw the same conclusions. Some highlight automation-related revenue within reported results. Others point to current profitability and say they will review further disclosures before adjusting share-value estimates.

Those differences show that Tesla’s price incorporates expectations for products still in development, while share issuance and compensation remain important in how ownership is measured.

Also Read: Elon Musk Wins Shareholder Approval for $1 Trillion Tesla Pay Plan