Michael Burry, one of GameStop’s most closely watched backers, is signaling a potential exit from the stock after the company’s shock attempt to acquire eBay, warning that the proposed takeover risks burying the retailer under unsustainable debt while exposing the limits of CEO Ryan Cohen’s transformation strategy.
The investor, whose early bullish bet on GameStop during the meme-stock frenzy turned him into a cult figure among retail traders, said Monday he may dramatically reduce or completely sell his position following news of the company’s $56 billion offer for eBay.
“I may not last the week with my GameStop position fully intact,” Burry wrote in a Substack post. “I will certainly sell to an extent, perhaps all or some but alas, no, not none.”
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The remarks mark one of the sharpest public criticisms yet of Cohen’s efforts to reinvent GameStop from a struggling brick-and-mortar gaming retailer into a broader digital commerce and technology platform.
GameStop announced over the weekend that it had submitted a $125-per-share offer for eBay, valuing the online marketplace at roughly $56 billion. The company said the proposed acquisition would be financed through a combination of existing cash and third-party funding, including a “highly-confident” financing letter from TD Securities for as much as $20 billion.
For Burry, however, the issue is not simply the size of the transaction. It is what the deal says about GameStop’s strategic direction at a moment when financial markets are becoming increasingly hostile toward highly leveraged corporate expansion.
After years in which ultra-low interest rates fueled aggressive mergers and speculative growth strategies, investors are now rewarding balance-sheet discipline, stable cash generation, and exposure to structural themes such as artificial intelligence infrastructure and cloud computing. Against that backdrop, Burry argued that GameStop’s pursuit of eBay looks less like innovation and more like a conventional retail consolidation play with potentially dangerous financing risks.
Despite previously praising Cohen as a rare capital allocator and even likening him to Warren Buffett, Burry said the eBay strategy “could not be more pedestrian.”
“Ryan cannot be after fat to cut, if only because no amount of cut fat makes this deal work,” Burry wrote.
His criticism centers heavily on leverage. Burry warned that the announced $56 billion figure is likely only an opening proposal and that any final agreement could require substantially more financing, pushing GameStop into what he described as distress-level debt territory.
“That also means that the deal would probably carry much more leverage, ‘to a level of debt that borders on distressed and tends to strip competitiveness and innovation from such-stricken companies,’” he wrote.
The concern reflects broader anxiety on Wall Street over whether companies attempting large acquisitions can maintain flexibility in a high-interest-rate environment where interest expenses quickly erode profitability and strategic maneuverability.
Burry’s skepticism is particularly notable because GameStop’s turnaround under Cohen had previously been built around preserving liquidity, cutting costs, and maintaining optionality. The retailer accumulated a significant cash position after capital raises during the meme-stock boom, giving management flexibility to explore acquisitions and diversification opportunities without immediately endangering the balance sheet.
The proposed eBay deal, however, would radically alter that equation. Analysts say the acquisition could transform GameStop into a broader marketplace player spanning collectibles, electronics, refurbished products, and peer-to-peer commerce. Yet it would also pit the company more directly against dominant e-commerce giants, including Amazon, while exposing it to slowing discretionary consumer spending and intensifying online retail competition.
Burry suggested Cohen is pursuing the wrong battlefield altogether.
“If Ryan really wanted to compete with Amazon, he would have acquired Wayfair (70% of its own last mile deliveries and warehouses all over) along with a cash flow machine and a bunch of float,” he wrote.
That argument highlights a deeper divide emerging in corporate America. Increasingly, investors are placing higher value on logistics infrastructure, cloud ecosystems, and AI-driven operational efficiency rather than pure marketplace scale. Companies with proprietary distribution networks and data advantages are seen as better positioned to defend margins and maintain customer loyalty in an increasingly automated economy.
Burry appeared to argue that eBay’s marketplace model lacks those strategic moats, especially when financed with large amounts of debt.
He acknowledged the attractiveness of the collectibles and secondhand goods market, which naturally overlaps with GameStop’s legacy business in used games and gaming hardware. But he argued the acquisition structure itself could cripple the company’s ability to compete effectively.
“If GameStop wants to do it with billions of interest expense and all manner covenants restricting its movements, it will not be breaking new ground,” Burry wrote. “It will be trotting in well-worn ruts on the road to capitalist Hell.”
The unusually blunt warning comes as speculative enthusiasm returns to portions of the technology and retail market, fueled partly by AI optimism and renewed appetite for growth assets. Yet Burry’s comments underscore a growing divide between investors chasing transformational narratives and those focused on valuation discipline and cash-flow durability.
His criticism also reinforces a broader point increasingly echoed across Wall Street: even companies with strong brands and ambitious leadership can become poor investments if the price of expansion becomes too high.