Michael Burry called Tesla Inc. shares "ridiculously overvalued" and said shareholder dilution is set to continue after the proposed $1 trillion pay package for co-founder Elon Musk, according to a Substack post.

Investor Michael Burry has publicly stated that Tesla shares are 'ridiculously overvalued.' In response, RBC analyst Tom Narayan acknowledged current market pressures on electric vehicles but maintained an 'outperform' rating on Tesla, citing the company's potential in AI-driven sectors such as Robotaxi and humanoid robotics. Narayan noted that while the U.S. auto market is currently favoring internal combustion vehicles and hybrids, Tesla's future opportunities in robotics could be significant even with modest market penetration.

Narayan emphasized that Tesla's stock is largely driven by long-term narratives and that there are no immediate negative catalysts as long as adverse data is absent. He contrasted the current situation with Burry's previous housing market call, noting the lack of concrete data against Tesla's future prospects. Ultimately, Narayan concluded that while the outcome is uncertain, current trends support Tesla's potential in emerging markets.

Burry says Tesla shares are 'ridiculously overvalued'

Investor Michael Burry making another big call against the market. The big short investor calling Tesla shares ridiculously overvalued. Tom Narayan covers Tesla and other automakers for RBC and joins us now. Tom great to see you. Thank you for being with us. We can start with Tesla but I would love to talk about how representative it is of the larger auto space and how difficult it is to be to get a handle on exactly the supply demand dynamics at a time of post pandemic transition and post tariff realization. Yeah I think what you're noticing more and more is the strength underlying the U.S. economy especially at the top end and maybe at the middle is manifesting itself with auto sales which have actually been stronger than what a lot of people expected. We did our own work to actually show that there's about a 6 to 7 million vehicle deficit of cars that were never purchased because of the pandemic. And you know in the U.S. in a lot of states you have to have a car. It's as simple as that. How do you get to work. And if you can afford the car you will buy it. And so you know at the beginning of the year I think folks were looking at something like a 15 million vehicle SAR for 2025. It's looking like it's probably going to be a 16 to 16 3 million number. So yes sure things are slowing down a little bit. There's been some pricing to offset some tariffs lately. We're with some OEMs. But if you take a step back there is some real strength of the economy. Unemployment is very low. We'll probably have another rate cut right later this year probably more next year. And then tariff resolution in 2026 especially with the USMCA. So given that backdrop we're actually pretty constructive on U.S. autos. So this goes to who's who's going to win. Right. Is it the U.S. auto manufacturers. Is it the electric vehicle manufacturers or is it as we have seen of late a real shift back to hybrid and frankly trucks and away from the Elon Musk's Teslas of the world. Yeah I mean let's just look at cars specifically or autos specifically. I would agree with that. It's IC cars in the U.S. definitely. Perhaps there's some room for E-REV or hybrid. Certainly EVs is not the place to be right now in the U.S. I do think there's room for that maybe later in the decade. But right now the strength is at the heart of the U.S. auto industry pickups large SUVs ISEs think GM most notably maybe Ford as well. Some Stellantis. So we think that's really where you'll see most of the benefit near term. Not as much with the EV space in the U.S. EV space has certainly been under pressure at the same time though. Tom you have an outperform on Tesla. Why do you continue to like this company. Yeah it's certainly not really because of autos. It has more to do with the A.I. features right. So Robotaxi you guys well know my thoughts on on Robotaxi and then now the humanoid market. And yes look it's very early to tell where Tesla is going to be in that. So I look at Tesla the same way on humanoids as I do on Robotaxi which is I look at the top down. I think it's a huge market opportunity both humanoids and Robotaxi. And I'm assuming actually very small penetration levels for Tesla on humanoids only 5 percent of that market. It's a big opportunity this humanoid market. I don't think the investor base has caught up with reality. Certainly folks like me are new to the game. When you talk to the experts in robotics as we have recently you realize why there's such a big market opportunity. And you know that tends to move this stock right. It's a narrative stock as long as we don't have negative data points. And this is like a 10 15 year horizon. What is the negative catalyst here to kind of put some shade on the stock. So right now we're looking at that perspective and we like the stock. So what do you make of Michael Burry's call then when he says Tesla is ridiculously overvalued. Would you just tell him that you're looking at the future and what's going on with not just Robotaxi but potentially what happens with humanoids. Yeah I mean like we don't know. Here's the answer. Right. I mean we don't know who's going to win. What what do we know about humanoids. We know there's going to be a lot of them. We know that's probably going to be decades from now. We know the form factor will probably be humanoid and we know Tesla is one of the leaders. So you know from that basis I do think there's enough inertia that should support the stock. Maybe in 10 years or five years we look back in and maybe I was wrong you know. But I just think it's it's too early to tell. Right. I mean I think the data that that that Michael Burry had during the housing crisis was real data. Right. I don't think we have actual real life data to show that humanoids won't happen or Tesla won't be a big piece of that or in the Robotaxi side either. Right. So I'm following what the data that we have presenting before us today is. And I like the odds that Tesla has to capture it. But ultimately none of us really know the answer.

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