Michael Burry has disclosed that he holds a position in GameStop, the videogame retailer that has become synonymous with retail trading frenzies. In a post published on his Substack, "Cassandra Unchained," Burry laid out five takeaways explaining why he has returned to the stock and how he views the company under CEO Ryan Cohen.
Burry is best known for his prescient short position against the U.S. housing market prior to the 2008 crisis. He previously owned GameStop shares in 2018 but divested weeks before the dramatic short squeeze of January 2021 that pushed the stock up more than 1,600% when retail traders coordinated to force bearish investors to unwind positions.
1. A repeat of 2021’s massive short squeeze is unlikely
Burry dismisses the idea that GameStop’s value lies in staging another explosive short squeeze. He wrote, "The value is not in another big short squeeze... which is not likely to happen. At least, the most commonly cited theories oriented to such an outcome do not amount to much for me." In short, he views the odds of a similar retail-driven price cascade as slim and does not place primary investment merit on that possibility.
2. The investment thesis centers on Cohen’s capital allocation
According to Burry, the stock is effectively a bet on Ryan Cohen’s capacity to convert GameStop’s cash resources into a growing business. He describes Cohen as someone "making lemonade out of lemons," acknowledging the company currently runs a weak core business but is exploiting the meme-stock environment to raise cash. Burry says Cohen is sitting on that cash and waiting for an opportunity to execute "a big buy of a real growing cash cow business."
He draws a parallel between Cohen and Warren Buffett in the sense of waiting patiently to redeploy capital, saying, "I think he (Ryan) is doing what Warren Buffett did and what I am doing. Essentially, waiting patiently. Unlike me, he is doing it with a public company, which, by all prior evidence, is very hard."
3. Compensation plan signals potential for major acquisitions
GameStop recently disclosed a compensation package for Cohen with a headline value near $35 billion. Burry interprets the structure of that plan as indicative of an expectation for large-scale change: the performance hurdles require Cohen to grow the company’s market value by more than tenfold to receive the full benefit. Burry notes, "This is the deal I would want if I wanted more ownership, was sitting on a growing, giant pile of cash and planned a transformative acquisition or acquisitions."
4. Collectibles are unlikely to be the main engine of shareholder value
GameStop has pursued initiatives to drive traffic and sales, including partnerships to sell exclusive game versions and collectibles, plus the launch last year of Power Packs - a collectible trading-card product and platform that the company said attracted strong demand. Burry, however, views such initiatives as modest contributors at best. He states plainly, "I do not see Power Packs as more than a minor incremental driver of shareholder value, at best."
5. The stock prices in a premium but still presents asymmetric upside
Burry acknowledges he is paying somewhat more than the company’s hard asset value for the shares, but he believes the positioning offers an attractive risk-reward profile. He characterizes being long GameStop as "almost as asymmetric as it gets these days in U.S. common stocks." That framework underpins his decision to hold the stake despite the premium relative to tangible assets.
Additional note included in the original post
The original material also contained a promotional line referencing a Fair Value calculator and an associated sale offer. That content offered a tool-based approach to assessing whether GameStop represents a bargain by using multiple valuation models. The post itself, however, contains the substantive investor analysis summarized above.
In sum, Burry’s public reconciliation of his position frames GameStop less as a vehicle for a repeat meme-driven rally and more as a capital allocation story centered on Cohen’s ability to redeploy cash into a sizeable, growth-oriented acquisition. He remains skeptical that collectibles or repeat squeezes will drive material long-term value on their own, while viewing the upside from a successful transformative deal as the primary source of potential shareholder gains.