- Michael Burry sold his entire GameStop position after CEO Ryan Cohen unveiled the $56 billion unsolicited bid for eBay, saying in his Substack newsletter that “any which way I sliced it, the Instant Berkshire thesis was never compatible.”
- Burry cited concerns about the debt GameStop would need to take on for an acquisition of a company nearly five times its own market cap — despite a $20 billion TD Bank commitment letter already secured by Cohen.
- GameStop shares fell more than 2% in post-market trading following Burry’s disclosure; separately, Burry said he more than doubled his position in Lululemon and has purchased puts on the iShares Semiconductor ETF.
- Burry’s exit marks his first disclosed sale since launching his Substack newsletter and is notable given his early 2019 bullish call on GameStop helped plant the seeds for the 2021 meme-stock mania.
What Happened?
Michael Burry, the investor made famous by “The Big Short” for correctly calling the 2008 housing collapse, told his Substack subscribers Monday that he sold his entire GameStop stake following Ryan Cohen’s announcement of an unsolicited $56 billion bid for eBay. Burry said the acquisition thesis was incompatible with his original investment case for GameStop, which he had framed as an “Instant Berkshire” play — a lean, cash-rich vehicle that would redeploy capital intelligently rather than lever up for a moonshot acquisition. He flagged the debt burden as the critical concern. GameStop shares fell more than 2% in after-hours trading. In the same newsletter post, Burry disclosed doubling his Lululemon position and opening a put position on the iShares Semiconductor ETF.
Why It Matters?
Burry’s exit is a meaningful contrary signal in the GameStop/eBay deal narrative. While retail traders and momentum investors have been energized by Cohen’s audacious bid, one of the sharpest fundamental investors associated with the stock is walking away specifically because of the capital structure risk the deal creates. His concern echoes Wall Street analysts who have also questioned how GameStop — valued at roughly $12 billion — credibly finances a $56 billion acquisition even with TD Bank’s $20 billion commitment, particularly if it needs to tap sovereign-wealth funds or issue more GameStop shares at uncertain prices. A stock-based deal component means eBay shareholders absorb GameStop equity risk, which becomes harder to sell if the acquiring stock weakens.
What’s Next?
Watch eBay’s board response as the primary event — a rejection triggers the proxy fight Cohen promised. Burry’s exit may signal to other fundamental investors that the risk/reward has shifted; if institutional selling pressure grows, the GameStop share price could weaken the deal’s stock component, further complicating financing. Cohen’s ability to bring in sovereign-wealth or other large outside capital will be critical to filling the gap between the TD Bank commitment and the full $56 billion price tag.
Source: Bloomberg
