Michael Burry, the investor famous for predicting the 2008 housing crash, has issued a stark warning on technology stock valuations. In a detailed Substack analysis, he contends that the sector's prices are even more expensive than they seem. His critique centers on how companies account for stock-based compensation.
Burry argues that current earnings calculations fail to properly include the full costs of this compensation. He specifically points to the money spent on share buybacks to offset dilution and the net taxes related to shares vesting. The investor says this accounting practice paints an overly rosy picture of corporate health.