Michael Burry, the investor made famous by The Big Short, has dumped his entire stake in GameStop Corp. (GME), abandoning his long-running bet on the meme-stock retailer just days after it launched an audacious $55.5 billion takeover bid for eBay Inc (EBAY). The deal has sent GameStop shares tumbling, split Wall Street, and sparked fierce debate over whether the bold gambit is a transformative turnaround play or a reckless, debt-fueled misstep.
The market has delivered a blistering verdict on the proposed tie-up in the sessions since the offer went public. GameStop’s stock plunged 10% in the first full day of trading after the bid was unveiled, followed by an additional 2.2% drop in the next session, erasing billions in market value. eBay, meanwhile, gave up nearly all its early momentum, sliding 2.4% after an initial 5.1% jump — a sharp reversal that signals investor optimism over the deal is fading fast, even as GameStop CEO Ryan Cohen mounts a combative defense of the $125-per-share offer.
Burry’s full exit marks a stunning reversal for one of GameStop’s most high-profile value-investing backers. He had long anchored his investment thesis on the retailer evolving into an “Instant Berkshire” — a holding company in the mold of Warren Buffett’s Berkshire Hathaway, built on its meme-stock windfall and steady cash flow. That framework was shattered, he said, by the mountain of debt required to pull off the eBay acquisition, which he warned would push GameStop’s leverage to 7.7 times EBITDA, a level bordering on distressed territory. The figure puts the retailer on par with struggling consumer-facing firms including Wayfair Inc. and Carvana Co., both of which have grappled with crippling debt loads in recent years.
At the heart of the market’s skepticism is a gaping hole in the deal’s financing structure. The $55.5 billion price tag is backed only by a $20 billion financing letter from TD Bank, paired with roughly $9 billion in cash on GameStop’s balance sheet. That leaves nearly $20 billion in unaccounted-for funding, which would almost certainly need to be covered by heavily dilutive equity issuances. Analysts are nearly uniform in warning that the market is unlikely to absorb the massive volume of new shares GameStop would need to sell without a steep collapse in its stock price, leaving the deal’s financial foundation deeply unstable.
The audacious bid is rooted in GameStop’s years-long struggle to reverse a structural decline in its core business. The video game retailer has posted four straight years of falling top-line revenue, as the global shift to digital game downloads hollowed out its brick-and-mortar footprint. While Cohen has steered the company back to profitability with a streamlined, high-margin small-box store model, the long-term outlook for its legacy physical media business remains bleak. The eBay bid, in turn, is a bet on radical reinvention: swapping a shrinking retail business for a stake in a mature, cash-generating e-commerce platform.
eBay, by contrast, is in the midst of a sustained growth run, on track for its fourth consecutive year of revenue gains. The platform counted 135 million active buyers at the end of March, with gross merchandise volume surging 18% year-over-year, including a 27% jump in domestic U.S. sales. Its stock has outperformed the broader market by a wide margin, rising more than 50% over the past 12 months and doubling over three years, hitting an all-time high earlier this earnings season.
For the deal’s bulls, the tie-up could unlock rare cross-sector synergies that neither company could achieve on its own. They argue that GameStop’s national network of physical stores could be repurposed as in-person logistics and fulfillment hubs for eBay, bridging the gap between online sales and offline customer service. The combined company would also immediately reverse GameStop’s years-long revenue slide, smoothing out cyclical volatility in its core business. Cohen, for his part, has signaled he plans to bring his aggressive cost-optimization playbook to eBay, aiming to unlock untapped growth at the already-thriving e-commerce platform.
Critics, however, say the bull case fails to address fundamental mismatches between the two companies, alongside the deal’s prohibitive risks. Many on Wall Street struggle to see how GameStop, a niche video game retailer with limited e-commerce experience, can successfully integrate and manage a platform the size of eBay, which already has a well-established management team and proven growth trajectory. The timing of the bid has also drawn fire: with eBay’s stock at all-time highs, GameStop is attempting to buy at the peak of the target’s valuation, leaving little room for upside even if the deal closes. Antitrust concerns are seen as minimal, but the track record for these “David-and-Goliath” takeovers — where a smaller company buys a far larger rival — is notoriously poor, with most failing to deliver on promised synergies.
With Burry’s high-profile exit, a cratering stock price, unresolved funding questions and looming leverage risks, GameStop’s blockbuster bid is now caught between Wall Street’s skepticism and Cohen’s unwavering ambition. It remains an open question whether the deal will go down as a masterstroke of corporate reinvention, or one of the most costly missteps in recent retail history. What is clear is that the odds of the deal crossing the finish line are growing slimmer by the day, as investor confidence fades and market scrutiny intensifies. For GameStop and Cohen, the coming weeks — which will bring clarity on financing terms, eBay’s board response, and regulatory reviews — will make or break the most audacious bet of the meme-stock era.
