Ryan Cohen spent Sunday night (Could 3) asserting a $55.5 billion bid for eBay. By Monday evening (Could 4), essentially the most credible worth investor in GameStop’s nook had offered each share he owned.
Michael Burry didn’t depart quietly. He defined precisely why. And his phrases are price studying rigorously.
What Burry mentioned about GameStop on Substack
“I offered my whole GME place,” Burry wrote in a Substack put up Monday night, in response to CNBC. “Any which method I sliced it, the Instantaneous Berkshire thesis was by no means suitable with greater than 5x Debt/EBITDA, by no means comfortable with curiosity protection beneath 4.0x.”
He closed with a line that can observe this deal for a very long time. “By no means confuse debt for creativity,” Burry wrote, CNBC confirmed.
Fund supervisor buys and sells
He additionally challenged the strategic logic straight.
“Ryan can’t be after fats to chop, if solely as a result of no quantity of reduce fats makes this deal work,” he mentioned, in response to Sherwood Information.
The put up represents the primary time Burry has absolutely offered a place since launching his Substack.
What the “Instantaneous Berkshire” thesis was
To grasp why Burry’s exit issues, it’s a must to perceive what he was initially shopping for. In January, Burry disclosed he was accumulating GameStop shares and explicitly in contrast Ryan Cohen’s capital allocation method to Warren Buffett’s early Berkshire Hathaway playbook, in response to MarketDash.
Affected person, opportunistic, and powered by a rising money pile slightly than borrowed cash.
Burry referred to as that thesis “Instantaneous Berkshire.” The concept was that Cohen would compound capital slowly, make disciplined acquisitions, and construct a sturdy enterprise with out stretching the stability sheet.
That was the model of GameStop Burry believed in. It isn’t the model Cohen introduced Sunday evening.
A $55.5 billion supply for eBay from an organization with a market cap of roughly $12 billion is just not affected person capital allocation. It’s an aggressive leveraged wager. And Burry’s math on what that wager really prices is blunt: at $125 per share, the deal would push leverage to roughly 7.7 occasions debt to EBITDA, a degree Burry described as “bordering on distressed,” in response to CNBC.
Why the leverage math troubles Burry
Burry’s framework is just not merely that he dislikes debt. It’s that he believes extremely leveraged corporations lose the factor that makes them aggressive. “The extra probably end result on the increased value sees leverage rise to 7.7x, a degree of debt that borders on distressed and tends to strip competitiveness and innovation from such-stricken corporations,” he wrote, in response to Stocktwits.
He cited Wayfair, Carvana, and Tub and Physique Works as cautionary examples of corporations that survived excessive leverage.
“These are the survivors. They’re few,” he wrote, Sherwood Information famous. Burry additionally mentioned he would have most popular GameStop to pursue Wayfair, which he described as a extra acceptable goal with last-mile supply infrastructure and money move.
He additionally expects Cohen’s $125 bid to be simply the opening quantity. Burry believes eBay’s board will reject the preliminary supply and that the revised deal will contact $65 billion, in response to Stocktwits. That will pressure GameStop’s funds even additional than the present proposal.
Michael Burry constructed a place round one particular concept and watched it collapse in a single eveningBrandon Bell/Getty Photos
How GameStop’s inventory reacted
GameStop shares fell roughly 10% on Could 4 following the eBay announcement, in response to CNBC. That’s GameStop’s largest intraday fall in 10 months, in response to Stocktwits. The market was not celebrating Cohen’s ambition. It was pricing within the danger that comes with an organization roughly one-fifth of eBay’s dimension attempting to soak up it.
Cohen addressed the financing skepticism in a CNBC interview Monday, saying GameStop has flexibility to difficulty fairness. Burry’s response to that framing, embedded in his Substack put up, was pointed. He described the capital markets method behind the bid as “pedestrian,” not artistic, Sherwood Information confirmed.
Key figures from Burry’s exit and the GameStop-eBay state of affairs:
Burry’s precise exit assertion: “I offered my whole GME place,” the primary full sale since his Substack launch, in response to CNBC
Burry’s leverage threshold: by no means suitable with greater than 5x Debt/EBITDA or curiosity protection beneath 4.0x, CNBC confirmed
Projected leverage at $125 per share deal: roughly 7.7x debt to EBITDA, bordering on distressed, in response to Stocktwits
Burry’s revised deal estimate: $65 billion if eBay’s board rejects the opening bid, Stocktwits famous
GameStop market cap at time of bid: roughly $12 billion, in response to Yahoo Finance
GameStop inventory decline on Monday: roughly 10%, its largest single-day drop in 10 months, Stocktwits confirmed
Burry’s most popular various goal: Wayfair, which he mentioned gives last-mile supply infrastructure and money move with out the identical leverage danger, in response to Sherwood Information
What this implies for Ryan Cohen’s credibility
Burry was not only a shareholder. He was essentially the most credible institutional voice within the bullish camp. His January thesis gave GameStop a legitimacy that separated it from the meme-stock narrative. A distinguished short-seller-turned-value-investor holding GameStop as a Berkshire-style compounding story was a narrative the market might inform with a straight face.
That story ended Monday evening. Burry’s exit doesn’t kill the eBay deal. But it surely does take away the mental scaffolding that made GameStop appear to be a worth proposition slightly than a speculative automobile. Cohen now has to make the case for his bid with out the help of the investor whose thesis most clearly legitimized his management.
The more durable drawback is what Burry’s framework reveals concerning the bid itself. If essentially the most disciplined worth investor who believed in Cohen’s imaginative and prescient concluded that this particular deal crosses an uncrossable line on leverage, the query for remaining shareholders is whether or not they share that line or are prepared to observe Cohen previous it. The reply to that query will form how this story ends.
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This story was initially printed by TheStreet on Could 5, 2026, the place it first appeared within the Investing part. Add TheStreet as a Most well-liked Supply by clicking right here.
