Ryan Cohen spent Sunday evening (May 3) announcing a $55.5 billion bid for eBay. By Monday night (May 4), the most credible value investor in GameStop’s corner had sold every share he owned.
Michael Burry did not leave quietly. He explained exactly why. And his words are worth reading carefully.
What Burry said about GameStop on Substack
“I sold my entire GME position,” Burry wrote in a Substack post Monday evening, according to CNBC. “Any which way I sliced it, the Instant Berkshire thesis was never compatible with more than 5x Debt/EBITDA, never ok with interest coverage under 4.0x.”
He closed with a line that will follow this deal for a long time. “Never confuse debt for creativity,” Burry wrote, CNBC confirmed.
Fund manager buys and sells
He also challenged the strategic logic directly.
“Ryan cannot be after fat to cut, if only because no amount of cut fat makes this deal work,” he said, according to Sherwood News.
The post represents the first time Burry has fully sold a position since launching his Substack.
What the “Instant Berkshire” thesis was
To understand why Burry’s exit matters, you have to understand what he was originally buying. In January, Burry disclosed he was accumulating GameStop shares and explicitly compared Ryan Cohen’s capital allocation approach to Warren Buffett‘s early Berkshire Hathaway playbook, according to MarketDash.
Patient, opportunistic, and powered by a growing cash pile rather than borrowed money.
Burry called that thesis “Instant Berkshire.” The idea was that Cohen would compound capital slowly, make disciplined acquisitions, and build a durable business without stretching the balance sheet.
That was the version of GameStop Burry believed in. It is not the version Cohen announced Sunday night.
A $55.5 billion offer for eBay from a company with a market cap of approximately $12 billion is not patient capital allocation. It is an aggressive leveraged bet. And Burry’s math on what that bet actually costs is blunt: at $125 per share, the deal would push leverage to roughly 7.7 times debt to EBITDA, a level Burry described as “bordering on distressed,” according to CNBC.
Why the leverage math troubles Burry
Burry’s framework is not simply that he dislikes debt. It is that he believes highly leveraged companies lose the thing that makes them competitive. “The more likely outcome at the higher price sees leverage rise to 7.7x, a level of debt that borders on distressed and tends to strip competitiveness and innovation from such-stricken companies,” he wrote, according to Stocktwits.
He cited Wayfair, Carvana, and Bath and Body Works as cautionary examples of companies that survived extreme leverage.
“Those are the survivors. They are few,” he wrote, Sherwood News noted. Burry also said he would have preferred GameStop to pursue Wayfair, which he described as a more appropriate target with last-mile delivery infrastructure and cash flow.
He also expects Cohen’s $125 bid to be just the opening number. Burry believes eBay’s board will reject the initial offer and that the revised deal will touch $65 billion, according to Stocktwits. That would strain GameStop’s finances even further than the current proposal.
Michael Burry built a position around one specific idea and watched it collapse in a single eveningBrandon Bell/Getty Images
How GameStop’s stock reacted
GameStop shares fell roughly 10% on May 4 following the eBay announcement, according to CNBC. That is GameStop’s largest intraday fall in 10 months, according to Stocktwits. The market was not celebrating Cohen’s ambition. It was pricing in the risk that comes with a company roughly one-fifth of eBay’s size trying to absorb it.
Cohen addressed the financing skepticism in a CNBC interview Monday, saying GameStop has flexibility to issue equity. Burry’s response to that framing, embedded in his Substack post, was pointed. He described the capital markets approach behind the bid as “pedestrian,” not creative, Sherwood News confirmed.
Key figures from Burry’s exit and the GameStop-eBay situation:
Burry’s exact exit statement: “I sold my entire GME position,” the first full sale since his Substack launch, according to CNBC
Burry’s leverage threshold: never compatible with more than 5x Debt/EBITDA or interest coverage under 4.0x, CNBC confirmed
Projected leverage at $125 per share deal: approximately 7.7x debt to EBITDA, bordering on distressed, according to Stocktwits
Burry’s revised deal estimate: $65 billion if eBay’s board rejects the opening bid, Stocktwits noted
GameStop market cap at time of bid: approximately $12 billion, according to Yahoo Finance
GameStop stock decline on Monday: approximately 10%, its largest single-day drop in 10 months, Stocktwits confirmed
Burry’s preferred alternative target: Wayfair, which he said offers last-mile delivery infrastructure and cash flow without the same leverage risk, according to Sherwood News
What this means for Ryan Cohen’s credibility
Burry was not just a shareholder. He was the most credible institutional voice in the bullish camp. His January thesis gave GameStop a legitimacy that separated it from the meme-stock narrative. A prominent short-seller-turned-value-investor holding GameStop as a Berkshire-style compounding story was a story the market could tell with a straight face.
That story ended Monday night. Burry’s exit does not kill the eBay deal. But it does remove the intellectual scaffolding that made GameStop look like a value proposition rather than a speculative vehicle. Cohen now has to make the case for his bid without the support of the investor whose thesis most clearly legitimized his leadership.
The harder problem is what Burry’s framework reveals about the bid itself. If the most disciplined value investor who believed in Cohen’s vision concluded that this specific deal crosses an uncrossable line on leverage, the question for remaining shareholders is whether they share that line or are willing to follow Cohen past it. The answer to that question will shape how this story ends.
Related: Michael Burry buys beaten-down mega tech stock
