Michael Burry, who last month deregistered his hedge fund Scion Asset Management, took to a newly launched Substack account to reveal a bet against Elon Musk’s Tesla.
Burry said Tesla dilutes its shareholders at an estimated rate of 3.6% per year thanks to the stock-based compensation it awards employees without buybacks to offset the impact. CEO Musk’s gargantuan compensation would make matters worse, he added.
The 2025 pay plan, overwhelmingly approved by shareholders last month, could give Musk at least tens of millions of additional Tesla shares that could further dilute existing shareholders’ holdings. At the high end, Musk would receive hundreds of millions of shares that would raise his Tesla stake to 29% from a current 15%, as long as he meets rigorous goals.
The company’s stock was trading at about $426 Monday, down less than 1% after Burry’s blog post was published, but still up more than 6% year to date on the rebound from a major stock slump earlier in the year.
Apart from being overvalued, Burry also took a shot at the company’s superfans, saying Tesla’s top priority is a moving target.
“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,” the legendary investor said.
Tesla did not immediately respond to Fortune’s request for comment.
It’s unclear if Gates has closed the trade, but Musk hasn’t forgotten.
