Michael Burry warns the U.S. stock market could face a crash worse than the 2000 dot‑com bubble. The veteran investor says several tough years may be ahead for investors. He points to the surge in AI and tech stock valuations, combined with the dominance of passive investing, as key risks.
Burry, known for predicting the 2008 housing crisis, has issued crash warnings in multiple years, such as 2019, 2021, and 2022, often citing market bubbles in stocks, indexes, and real estate. Recent discussions reference his ongoing pessimism, with some noting he hinted at collapses via investments like private prison stocks amid expected turmoil.
Burry says more than half of U.S. equity assets are now in index funds and ETFs. That means fewer active investors are analyzing individual companies. Without active capital, the market has less of a safety net. In a downturn, losses could amplify quickly, and recovery may take longer.
He highlights Nvidia, Palantir, and other AI-heavy names as particularly risky. These companies have soared not because of profits but due to AI hype and speculative trading. Burry compares today’s environment to the late 1990s internet boom but says it is even more extreme. The excitement around AI is driving stock prices far above sustainable earnings.
“Big Short” investor Michael Burry criticized Tesla in his latest Substack newsletter, calling the electric-vehicle maker “ridiculously overvalued” and pointing to years of shareholder dilution as a central concern. Burry argued that Tesla’s valuation remains disconnected from its fundamentals and highlighted that the company continues to expand its share count with no buyback program in place to offset the effect on existing shareholders.
Burry cited Tesla’s SEC filings showing that the company’s diluted share count has grown at an annual pace of roughly 3.5–3.7% over the past several years, driven primarily by stock-based compensation and past equity raises. Tesla’s outstanding shares have risen from approximately 1.0 billion in early 2020 to more than 3.4 billion today on a split-adjusted basis following the company’s 5-for-1 stock split in 2020 and 3-for-1 split in 2022, both of which increased the total number of shares available to the market.
He noted that Tesla issued multiple major equity offerings during the 2020–2021 period, including two $5 billion at-the-market (ATM) raises in September and December 2020, followed by additional tranches in 2021 totaling roughly $12 billion in new equity issuance. These capital raises contributed significantly to the expansion of the company’s float and remain a key driver of long-term dilution.
Burry also referenced Tesla’s most recent quarterly filings, which reported over $1.7 billion in stock-based compensation (SBC) expense year-to-date, resulting in a continual increase in the weighted-average share count used for earnings calculations. Tesla continues to rely heavily on SBC as part of its employee and executive compensation structure, including multi-year, performance-based awards.
Tesla has no active share-buyback program, and CEO Elon Musk has previously stated that repurchases would only be considered once the company achieves more predictable and sustained free-cash-flow levels. Burry argued that the absence of buybacks means shareholders absorb the full impact of ongoing dilution, particularly as the company issues new shares to employees and through equity-linked programs.
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