""Of every dollar of earnings per share that GAAP blesses, shareholders see only 83.49 cents of that dollar. The wayward 16.51 cents wave crudely at GAAP and thumb their noses at shareholders on their way to employees' pockets.""
""Burry calculated that under generally accepted accounting principles (GAAP), Nasdaq 100 earnings are overstated by nearly 20% because SBC costs aren't fully factored in.""
""Wall Street analysts, in part by adding back SBC, pegged that figure at $5.8 trillion. Meanwhile, Burry's analysis put 'true owners' earnings' at $4.1 trillion.""
""The $1.7 trillion gap is an 'earnings illusion,' as it reflects the difference between what shareholders really owned of corporate earnings and what Wall Street and media reported.""
The AI boom has driven tech stocks to historic highs, but valuations may be misleading. Michael Burry argues that stock-based compensation costs are not fully accounted for, overstating Nasdaq 100 earnings by nearly 20%. He claims that Wall Street's forward earnings estimates are significantly higher than actual owners' earnings when adjusted for these costs. Burry's analysis shows a $1.7 trillion gap between reported earnings and true owners' earnings, labeling this discrepancy an 'earnings illusion' that misrepresents shareholder value.
Read at www.businessinsider.com
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