Tesla, downside bets grow: 'The Big Short' arrives
Hedge fund manager Michael Burry, made famous by the Hollywood film about subprime mortgages, criticises the title: 'Ridiculous valuations'
The theme of Tesla's overvaluation returns to centre stage on Wall Street, with the sortie of Michael Burry. Not just any investor, since he is the hedge fund manager and investor made famous by The Big Short, the Brad Pitt-produced film that recounted the season of the subprime mortgage meltdown in Hollywood style. Burry, who rightly bet against the US housing market bubble, has now taken aim at Tesla, calling it 'ridiculously overvalued' in a post on his blog, a few days after criticising the valuations of artificial intelligence companies. In his Substack Cassandra Unchained, Burry estimated that Tesla dilutes shareholders by 3.6 per cent a year without buybacks, and that Tesla CEO and founder Elon Musk's new maxi-compensation plan approved in recent weeks - potentially up to $1 trillion in shares over the next decade - will further increase dilution. Norges Bank Investment Management, the world's largest sovereign wealth fund, had voted against the package, citing concerns over its size, dilution and insufficient mitigation of Musk's dependence. Resistance now seems to extend from short sellers like Burry to traditional asset managers.
At the current price, Tesla trades at 209 times forward earnings, against a five-year average of 94 and compared to 22 times for the S&P 500, according to Lseg data.
The latest figures on European registrations, meanwhile, confirm Tesla's continuing difficulties in several key overseas markets, with a year-on-year slump in November, as the US electric vehicle manufacturer is essentially showing difficulty in stemming market share losses despite the launch of new versions of its best-selling Model Y.
Monthly registrations, an indicator of sales, fell 58 per cent in France to 1,593 vehicles sold, 59 per cent to 1,466 cars in Sweden, 49 per cent to 534 cars in Denmark, 44 per cent in the Netherlands to 1,627, 47 per cent in Portugal to 425 and 9 per cent in Spain to 1,523, according to official figures.
However, in Norway, registrations almost tripled to 6,215 cars, beating the country's annual sales record by one month. There was also a substantial rebound in Italy, with an increase of 58.1%, although the 11-month comparison remains negative.
