Michael Burry Exits GameStop After Ryan Cohen’s eBay Bid
CNBC reported Tuesday that “Big Short” investor Michael Burry has liquidated his entire GameStop position. The exit came after GameStop CEO Ryan Cohen launched an unsolicited $55.5 billion bid for eBay. Burry said the deal’s debt requirements made his investment thesis completely untenable.
The Bid That Broke the Bull Case
GameStop proposed acquiring eBay at $125 per share in a cash-and-stock transaction. The offer values the e-commerce platform at roughly $55.5 billion. That figure dwarfs GameStop’s own market capitalization of just under $12 billion.
The offer is structured as a 50-50 cash-and-stock split. GameStop secured a $20 billion financing letter from TD Bank to support the cash component. A substantial gap still remains between that commitment and the total implied price tag.
Cohen addressed the proposal in a CNBC interview Monday but provided little detail on how that gap would close. He indicated GameStop could issue new equity but stopped short of presenting a concrete financing plan. GameStop shares fell roughly 10% Monday as investor skepticism mounted.
Burry’s “Instant Berkshire” Thesis Explained
Burry had been building a position in GameStop around what he called an “Instant Berkshire” idea. The concept envisioned Cohen transforming the retailer into a diversified holding company modeled loosely on Berkshire Hathaway. Disciplined deal-making and a clean balance sheet were central to that view.
The eBay offer shattered both conditions. Burry wrote in a Substack post late Monday that his thesis was never compatible with debt-to-EBITDA above five times or interest coverage below four times. He estimated the eBay acquisition would push leverage to approximately 7.7 times — a level he described as bordering on distressed territory.
Cautionary Comparisons to Debt-Heavy Peers
To illustrate his concern, Burry pointed to companies that operated under similarly heavy debt loads. Wayfair spent years navigating that pressure, he noted. Carvana nearly collapsed under comparable leverage and may still face challenges. Bath and Body Works has struggled in the same range. All three represent the rare survivors of extreme indebtedness, Burry argued, and the odds are unfavorable.
eBay confirmed receipt of the proposal in a statement Monday. Its board said it would review the offer, though no timeline was provided. The outcome of that review and the broader question of financing leave the deal in deep uncertainty.
GameStop’s GME stake represented Burry’s first disclosed sale since he launched his Substack investment commentary. His parting line from the post was characteristically terse: “Never confuse debt for creativity.”
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