Michael Burry Exits GameStop After Cohen’s Debt-Heavy eBay Bid
CNBC reported Tuesday that “Big Short” investor Michael Burry has liquidated his entire GameStop position. His exit followed GameStop CEO Ryan Cohen‘s unsolicited bid to acquire eBay for approximately $55.5 billion. Burry said the deal’s debt load destroyed the logic underpinning his investment.
Burry’s Thesis Collapses Under Leverage
Burry had been building what he called an “Instant Berkshire” thesis around GameStop. The idea centered on Cohen using the company’s cash-rich balance sheet to make disciplined, value-creating acquisitions. A debt-to-EBITDA ratio above five times was never part of that picture, Burry wrote in a Substack post Monday night.
He estimated the eBay deal would push leverage closer to 7.7 times EBITDA at the proposed valuation. That figure, he argued, sits in distressed territory. Burry cited Wayfair, Carvana, and Bath and Body Works as cautionary examples of companies that labored — or nearly collapsed — under comparable debt burdens. “Never confuse debt for creativity,” he wrote, calling it his first sale since launching his Substack.
The Deal Raising Eyebrows
GameStop’s unsolicited, nonbinding offer pegs eBay at $125 per share, split evenly between cash and stock. The proposal values the online marketplace at a hefty premium to recent trading levels. The problem is scale. GameStop’s own market capitalization sits below $12 billion, making the financing math deeply uncertain.
The company has secured a $20 billion financing letter from TD Bank. That commitment still leaves a substantial gap relative to the full purchase price. Cohen, in a combative CNBC interview Monday, acknowledged GameStop could issue equity to bridge the shortfall. He offered no definitive plan beyond directing viewers to published materials. eBay’s board confirmed receipt of the offer and said it would review the proposal.
Background: GameStop’s Long Road From Meme Stock
GameStop became a cultural flashpoint in early 2021 when retail traders drove its shares to extraordinary heights. Cohen, a co-founder of Chewy, took control of the company and began repositioning it as a cash-generating holding company rather than a dying brick-and-mortar retailer. That repositioning attracted serious value investors, including Burry, who saw echoes of Berkshire Hathaway’s early acquisition strategy. GameStop shares fell roughly 10% Monday, signaling broad skepticism about Cohen’s ability to execute a transaction of this magnitude.
What Comes Next
Burry’s exit strips one high-profile validator from the GameStop story at a critical moment. With eBay’s board deliberating and financing details still vague, market scrutiny on Cohen’s next move will be intense. Investors watching GME will be looking for a concrete funding plan before confidence returns.
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