Michael Burry dumps GameStop stock after eBay bid

Michael Burry sold his full presumption successful GameStop aft the company's unsolicited $56 cardinal bid for eBay, saying the indebtedness load required to concern the woody shattered his concern lawsuit for the stock.

"I sold my full GME position," Burry wrote successful a Substack station precocious Monday. "Any which mode I sliced it, the Instant Berkshire thesis was ne'er compatible with > 5x Debt/EBITDA, ne'er good with involvement sum nether 4.0x ... As a result, GME is the archetypal merchantability since I started this Substack."

Burry, who roseate to fame for betting against U.S. owe securities earlier the 2008 fiscal crisis, had envisioned GameStop evolving into a holding institution modeled connected Berkshire Hathaway. That thesis, which helium called "Instant Berkshire," could not accommodate the leverage a takeover of eBay would require, helium said. At the projected valuation, helium calculated, leverage would scope astir 7.7 times indebtedness to net earlier interest, taxes, depreciation and amortization — a level helium described arsenic bordering connected distressed. "Wayfair lived determination for years, Carvana astir died determination and inactive mightiness from specified a start. Bath & Body Works too. Those are the survivors. They are few," helium wrote. "Never confuse indebtedness for creativity."

Monday's announcement sent GameStop banal down astir 10%, a driblet that analysts attributed to doubts astir whether the institution could realistically propulsion disconnected a transaction of this size.

GameStop's offer, enactment guardant Sunday, would wage eBay shareholders $125 per stock — divided evenly betwixt currency and banal — placing eBay's undiluted equity worth astatine astir $55.5 billion. That terms tops eBay's astir caller Friday adjacent of $104.07 by 20%. GameStop's ain marketplace capitalization is astir $12 billion.

The financing operation includes astir $9.4 cardinal successful currency GameStop held arsenic of Jan. 31, 2026, and up to $20 cardinal successful indebtedness backed by a committedness missive from TD Securities, arsenic GameStop elaborate successful its proposal. That inactive leaves a spread betwixt disposable backing and the afloat acquisition price. Ryan Cohen, appearing connected CNBC Monday, declined to specify however the remaining backing would beryllium sourced, though helium acknowledged that issuing caller equity was among the options disposable to GameStop.

Cohen, who took implicit GameStop successful aboriginal 2021, has presided implicit a fiscal turnaround that converted a $381 cardinal nett nonaccomplishment that twelvemonth into $418 cardinal successful nett income by fiscal 2025. He told The Wall Street Journal helium is prepared to instrumentality the connection straight to eBay shareholders done a proxy combat if eBay's committee declines to engage, and that helium intends to pb the combined institution arsenic CEO without wage oregon currency bonuses.

The woody requires support from eBay's board, regulators, and shareholders of some companies.