Tesla is highlighted as a significant component of the Nasdaq 100 with substantial stock-based compensation and minimal profits, contributing to accounting distortions.
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Buybacks and Stock Based Compensation (SBC) Distort True Owner's Earnings!
Value Investing with Sven Carlin, Ph.D.Apr 15, 2026
This video discusses how stock buybacks and stock-based compensation can distort a company's true earnings and valuation, citing examples from Nvidia, Amazon, Apple, and Nike. The creator argues that focusing on price, especially for buybacks, can be value-destructive if done at inflated valuations, and emphasizes the importance of true owner's earnings for long-term value investing.
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Shopify is mentioned as a company where Michael Burry claims there are no true owner's earnings due to accounting distortions like stock-based compensation.
Palantir is mentioned as a company where Michael Burry claims there are no true owner's earnings due to accounting distortions like stock-based compensation.
Nike's significant buybacks over the last decade have not proportionally reduced share count, suggesting that much of the capital was used to reward selling shareholders at higher prices.
Apple's massive buybacks, especially at current high prices, are value-destructive for existing shareholders, rewarding sellers rather than creating long-term value.
Amazon's net income of $77 billion may be impacted by $24 billion in stock-based compensation, with potential dilution requiring significant free cash flow.
Nvidia's net income of $120 billion is potentially overstated due to stock-based compensation and the impact of share repurchases, suggesting a lower true owner's earnings.
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