Michael Burry, the investor famous for betting against the housing market before the 2008 crash, has sold his stake in GameStop. The move came after the video-game retailer made a $55.5 billion bid for eBay, a deal that Burry said broke the investment case he had held since January.
Why the eBay bid changed everything
Burry, who runs Scion Asset Management, had built his GameStop position around a simple idea: the company was sitting on a pile of cash and could be run like a Berkshire Hathaway-style holding company. That thesis depended on GameStop using its cash for conservative investments or buybacks, not a massive hostile takeover.
The eBay bid changed all that. Burry disclosed the exit in a regulatory filing, though he did not comment publicly on the sale. The move wiped out his position, which had been one of the largest stakes in his portfolio.
Burry's GameStop history
Burry first revealed a stake in GameStop in early 2021, around the same time retail traders on Reddit's WallStreetBets pushed the stock to absurd heights. Unlike those traders, Burry was betting on the company's fundamentals—not a short squeeze. He argued that GameStop, with its debt-free balance sheet and $1.2 billion in cash, could become a value stock under the right management.
For months, he held steady even as the stock swung wildly. But the eBay offer, which GameStop disclosed in a press release, signaled a shift in strategy that Burry could not support.
GameStop's board approved the bid in February, offering $55.5 billion in cash and stock for the online marketplace. eBay rejected the offer, but the attempt alone confirmed a new direction for the company.
Without Burry's backing, GameStop faces an uncertain future. The stock, which had already fallen from its 2021 highs, dropped another 4% after the filing revealed the exit. Meanwhile, the company has not commented on any revised bid for eBay or alternative plans for its cash.
Burry's departure raises questions about whether other value investors will follow. The company's next quarterly report, due in June, will show if any major holders have changed their positions.
