Michael Burry told GameStop to be like Buffett — now he's sold all his shares in disgust. Why debt was the deal breaker

In January, Michael Burry was bullish on GameStop. He was buying shares, publishing his thesis on Substack, and making a case that CEO Ryan Cohen could turn a struggling video game retailer into something resembling a modern-day Berkshire Hathaway. Four months later, he has now sold everything — and left a note that reads like a goodbye letter to a company that broke its own promise.

“I sold my entire GME position,” Burry wrote on Substack (1) late Monday, according to CNBC (2). “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.”

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The man who made his name seeing through exactly that kind of disguise had briefly missed it himself.

What Burry originally believed

Back in January 2026, Burry wrote a Substack post about how he was making a long-term bet on Ryan Cohen, the GameStop CEO (3).

“I believe in Ryan, I like the setup, the governance, the strategy as I see it. I am willing to hold long-term, and I am excited to see where this goes,” he wrote (3).

The setup he liked was specific (3). GameStop had used periods of investor interest to raise billions through equity offerings (3), leaving the company with a substantial cash pile. It had plenty of past net operating losses, which it could use to shield future income (4) from taxes. And GameStop had posted net income of $418 million in 2025 — its most profitable year in a long time (5).

Burry straight-up compared Cohen to Warren Buffett — suggesting GameStop could become a business like Berkshire Hathaway, which Buffett bought in 1962 as a dying textile manufacturer and turned into a vehicle for acquiring great companies on the cheap (6).

Yet Burry’s thesis hinged on Cohen staying disciplined with patient acquisitions at sensible prices that are funded by GameStop’s existing cash pile rather than relying on borrowed money (7). That was the version of GameStop Burry believed in.

What changed

On Friday, The Wall Street Journal (8) reported that GameStop was preparing a non-binding offer to acquire eBay for $125 a share in cash and stock (9) — a deal valuing the e-commerce company at roughly $56 billion (10). GameStop’s own market cap at the time was about $11 billion (11), while eBay’s market value was capped at $46 billion (12). The company was proposing to buy something nearly five times its own size.

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Burry ran the numbers and didn’t like what he found. Business Insider (13) reports that, according to Burry, at $125 a share, the combined entity would carry a net-debt-to-EBITDA ratio of approximately 5.2 times and interest coverage of just 2.5 times annual profits. If eBay pushed back and demanded $65 billion, those figures would deteriorate to 7.7 times leverage and interest coverage of 1.2 to 1.5 times — a level Burry said “borders on distressed” (2), according to Business Insider.

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He cited Wayfair, Carvana and Bath & Body Works as companies that had tried to survive at similar debt loads. “Those are the survivors,” he wrote, according to CNBC (2). “They are few.”

After GameStop’s offer was reported, CEO Ryan Cohen sat down with CNBC’s Squawk Box for what ZeroHedge described as a “bizarre” 16-minute appearance (14). Andrew Ross Sorkin pressed Cohen on a reported $16 billion financing gap (if you take out the company’s market cap at $11 billion, with a $9 billion balance sheet and the $20 million from TD Securities he would eventually mention), Cohen pointed viewers to the company’s website, repeated that the offer was “half cash, half stock,” and cited a financing letter from TD Securities for up to $20 billion — without fully explaining how the numbers added up (15).

Becky Quick and Michael Santoli pressed him on dilution and strategic logic. Cohen didn’t resolve either concern clearly. Burry published his exit the same day, and GameStop shares fell about 10% on Monday after the announcement (16).

The line that hits home for Burry

“Wall Street does indeed mistake debt for creativity,” Burry wrote, according to Yahoo Finance, “and does so constantly.” Then he added something that sounded less like a dig at Cohen and more like an honest confession: “I of all people should have known” (17).

That line lands hard because Burry is the guy who made his name by spotting exactly this kind of leverage‑fueled overreach — he saw the 2008 housing collapse coming because he was the one who actually looked at the debt buried inside mortgage securities that that institutional investors had broadly accepted as safe without examining the underlying loans (18). The deep irony is that he almost fell for the same pattern in a different wrapper. You get the sense he’s fully aware of that.

His exit also matters on a structural level. Burry was the most credible investor who had publicly bought the Instant Berkshire story, according to TheStreet (7), and now with him gone, the stock’s institutional credibility (or whatever’s left of it) pretty much walked out the door with him. And to top it, GameStop no longer receives formal coverage from Wall Street analysts, which should be another red flag for disciplined investors, according to Invezz (19).

What this means for retail investors still holding GameStop

GameStop shares have been heavily owned by retail investors since the 2021 short squeeze that made the stock briefly famous (20), and many of those investors have held through years of volatility based on belief in Cohen and the company’s transformation story, which was a conviction Burry shared with his wallet.

His sudden exit doesn’t make the eBay deal impossible. The offer is non-binding and unsolicited, and eBay has not responded publicly, so the financing structure is still unclear. But it does remove the one credentialed outside voice who had put his own money behind the idea that GameStop was something more than a meme.

If you hold GameStop shares, the debt math Burry laid out is worth checking out, because his concerns are true (2). A company with a $11 billion market cap going after a $56 billion target through debt and dilution is a bet that requires a near-perfect execution that GameStop doesn’t seem to have.

Burry’s point is that those bets rarely work out, and calling it a bold acquisition doesn’t change that.