"Big Short" Investor Michael Burry Thinks Tesla Stock Is Overvalued. Is He Right?

Core Viewpoint - Tesla's profit growth is slowing, and its high valuation raises skepticism, particularly highlighted by investor Michael Burry's comments on the stock being "ridiculously overvalued" [2][3]. Financial Performance - Tesla's revenue for 2024 rose about 1% to approximately $97.7 billion, a significant slowdown from the 19% growth in 2023 [4]. - In Q3, Tesla achieved record revenue of about $28.1 billion, reflecting a 12% year-over-year increase, supported by 497,099 vehicle deliveries, which rose by 7% [4]. - Operating margin decreased to about 7.2% in 2024 from 9.2% in 2023, with operating income dropping 40% to $1.6 billion in the most recent quarter [5]. Investment and Future Prospects - Tesla is investing heavily in future projects, with expected capital expenditures of around $9 billion in 2025 for Cybercab manufacturing, semi production, and AI infrastructure [6]. - The stock's valuation is high, with a market capitalization exceeding $1.4 trillion and a price-to-earnings ratio of 294, indicating that the market anticipates a return to rapid growth and recovery of profit margins [7][8]. Market Comparisons - Tesla trades at approximately 16 times sales, while traditional automakers like Toyota and General Motors have price-to-sales ratios below 1, highlighting a significant valuation gap [8]. - Burry's critique emphasizes the reliance on ambitious narratives about autonomy and robotics, while underlying auto margins are weakening [9]. Investor Sentiment - The key issue for investors is not Tesla's ability to grow, but rather the speculative nature of its valuation and growth ambitions, which are challenging to forecast [10]. - There is a cautionary note regarding the enthusiasm for Tesla's stock, suggesting that current prices may be ahead of the fundamentals [11].