Ryan Cohen spent Sunday afternoon (May 3) announcing a $55.5 billion bid for eBay. By Monday night (May 4), the most credible value investor in the GameStop corner had sold all the shares he owned.
Michael Burry did not go away quietly. He explained exactly why. And his words are worth reading carefully.
What Burry said about GameStop on Substack
“I sold my entire position in GME,” Burry wrote in a Substack post on Monday night, according to CNBC. “Any way you slice it, Instant Berkshire’s thesis was never okay with more than 5x Debt/EBITDA, it was never okay with less than 4.0x interest coverage.”
He closed with a line that will continue this agreement for a long time. “Never confuse debt with creativity,” Burry wrote, CNBC confirmed.
The fund manager buys and sells
He also directly questioned strategic logic.
“Ryan can’t look for fat to cut, if only because no amount of fat cut makes this deal work,” he said, according to Sherwood News.
The post represents the first time Burry has completely sold a position since launching his Substack.
What was the thesis of the “Berkshire Instant”?
To understand why Burry’s departure is important, you have to understand what he was originally buying. In January, Burry revealed that he was accumulating GameStop shares and explicitly compared Ryan Cohen’s capital allocation approach to Warren Buffett’s first Berkshire Hathaway playbook, according to MarketDash.
Patient, opportunistic and driven by a growing amount of cash instead of borrowed money.
Burry called that thesis “Instant Berkshire.” The idea was that Cohen would slowly build capital, make disciplined acquisitions and build a durable business without stretching the balance sheet.
That was the version of GameStop that Burry believed in. It’s not the version Cohen announced Sunday night.
A $55.5 billion bid for eBay by a company with a market capitalization of about $12 billion is not a patient capital allocation. It is an aggressive leveraged bet. And Burry’s calculations about what that bet actually costs are stark: At $125 per share, the deal would take leverage to about 7.7 times debt to EBITDA, a level Burry described as “on the brink of distress,” according to CNBC.
Why the math of leverage worries Burry
Burry’s frame of reference is not simply that he doesn’t like debt. He believes that highly leveraged companies lose what makes them competitive. “The most likely outcome at a higher price is that leverage increases to 7.7 times, a debt level that borders on distressed debt and tends to strip competitiveness and innovation from affected companies,” he wrote, according to Stocktwits.
He cited Wayfair, Carvana and Bath and Body Works as 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 hopes that Cohen’s $125 offer is just the starting number. Burry believes eBay’s board will reject the initial offer and that the revised deal will reach $65 billion, according to Stocktwits. That would strain GameStop’s finances even more than the current proposal.
Michael Burry built a position around a specific idea and watched it collapse in a single night Brandon Bell/Getty Images
How GameStop Stock Reacted
GameStop shares fell about 10% on May 4 following eBay’s announcement, according to CNBC. This is GameStop’s biggest intraday drop in 10 months, according to Stocktwits. The market did not celebrate Cohen’s ambition. He was weighing the risk of a company about one-fifth the size of eBay trying to take him over.
Cohen addressed the financial skepticism in an interview with CNBC on Monday, saying GameStop has flexibility to issue shares. Burry’s response to that framing, embedded in his Substack post, was direct. He described the capital markets approach behind the bid as “pedestrian”, not creative, Sherwood News confirmed.
Key figures from Burry’s departure and the situation between GameStop and eBay:
Burry’s exact exit statement: “I sold my entire position in GME,” the first full sale since Substack’s launch, according to CNBC.
Burry’s Leverage Threshold: Never compatible with more than 5x Debt/EBITDA or interest coverage less than 4.0x, CNBC confirmed
Projected leverage of $125 per share deal: about 7.7 times debt to EBITDA, on the verge of crisis, according to Stocktwits.
Revised Burry deal estimate: $65 billion if eBay board rejects initial offer, Stocktwits said
GameStop market cap at time of offering: About $12 billion, according to Yahoo Finance
GameStop stock drop on Monday: About 10%, its biggest single-day drop in 10 months, Stocktwits confirmed
Burry’s preferred alternative target: Wayfair, which he says 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 bull camp. His January thesis gave GameStop a legitimacy that separated it from the meme narrative. A prominent short seller turned value investor who had GameStop as a Berkshire-style capitalization story was a story the market could tell seriously.
That story ended Monday night. Burry’s departure does not end the deal with eBay. But it does remove the intellectual scaffolding that made GameStop look like a value proposition rather than a speculative vehicle. Cohen now has to defend his bid without the support of the investor whose thesis most clearly legitimized his leadership.
The more difficult problem is what Burry’s framework reveals about the offer itself. If the most disciplined value investor who believed in Cohen’s vision concluded that this specific deal crosses an insurmountable line of leverage, the question for the remaining shareholders is whether they share that line or are willing to follow Cohen beyond it. The answer to that question will determine the ending of this story.
Related: Michael Burry Buys Beaten MegaTech Stocks
This story was originally published by TheStreet on May 5, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
