Michael Burry, the investor made famous by his prescient short position against the US housing market in “The Big Short,” has sold his entire stake in GameStop Corp. [NYSE: GME] following the company’s audacious unsolicited bid to acquire eBay Inc. [NASDAQ: EBAY].
GameStop CEO Ryan Cohen submitted a non-binding proposal on May 3, 2026, to acquire 100% of eBay at $125 per share in cash and stock, placing the total equity value of the deal at roughly $55.5 billion.
GameStop’s own market capitalisation at the time of the announcement was approximately $11 to $12 billion, meaning the company was proposing to acquire a business roughly five times its own size.
Burry disclosed his exit in a post on his Substack newsletter, writing: “I sold my entire GME position,” noting it was the first full sale since he launched the publication.
The thesis Burry had been building around GameStop was what he called the “Instant Berkshire” model, a belief that CEO Ryan Cohen could systematically allocate the company’s substantial cash pile into value-creating acquisitions in a manner reminiscent of Warren Buffett’s Berkshire Hathaway.
Burry argued clearly that this thesis was never built for the level of leverage required to finance a deal of this scale, writing that the “Instant Berkshire thesis was never compatible with more than 5x Debt/EBITDA.”
At the proposed price of $125 per share, Burry estimated the combined entity would carry a debt-to-EBITDA ratio of approximately 5.2 times and interest coverage of just 2.5 times, a combination he described as dangerously thin.
If eBay’s board rejected the initial offer and pushed back for a higher valuation, Burry projected leverage could reach 7.7 times debt to EBITDA, a level he described as bordering on distressed.
GameStop secured a “highly confident letter” from TD Securities for up to $20 billion in debt financing to support the deal, but even that figure would require the company to take on obligations far exceeding its current financial scale.
GameStop shares fell roughly 10% on the Monday after the announcement as investors digested the proposed deal’s feasibility, while Burry signed off with the blunt summary: “Never confuse debt for creativity.”
Ewan is a reporter at the Foreign Policy Journal, primarily covering US current affairs and news related to NYSE-listed stocks. He has over two decades of experience in journalism and digital publishing.
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