Michael Burry dumped his entire stake in GameStop after the company’s audacious bid for eBay , saying the deal’s heavy leverage shattered the investment case he had been building. “I sold my entire GME position,” Burry said in a Substack post late Monday. “Any which way I sliced it, the Instant Berkshire thesis was never compatible with > 5x Debt/EBITDA, never ok with interest coverage under 4.0x … As a result, GME is the first sale since I started this Substack.” GameStop made an unsolicited, nonbinding offer to acquire eBay for $125 per share in cash and stock, valuing the online marketplace at roughly $55.5 billion. The proposal is a steep premium to recent trading levels, but also raises questions about financing. GameStop’s market capitalization is a little less than $12 billion. Shares of GameStop fell about 10% Monday following the announcement, reflecting investor skepticism around the feasibility of the deal and the potential strain on the company’s balance sheet. GME 5D mountain GameStop over the past 5 days Burry, made famous by the “Big Short,” had thought that dealmaking could transform GameStop into a version of Berkshire Hathaway , but decided that the company’s capital structure following the proposed acquisition was incompatible with his “Instant Berkshire” thesis. That idea was never consistent with the level of indebtedness required to pursue a …
