GameStop draws attention after new analysis by Michael Burry

GameStop shares rose as much as 8.8% on Monday—their strongest daily move since May—reaching their highest level since October 8. Trading volumes spiked after investor Michael Burry revealed on the Substack platform that he holds shares in the company.

“Lately, I’ve been buying,” Burry wrote in an extensive analysis reviewing the stock’s history. According to him, he expects to invest at levels close to the company’s book value. He believes that, when protected by the real value of the company’s tangible assets, a long position in GameStop offers one of the most asymmetric opportunities among U.S. stocks at the moment.

In his post, Burry addresses several topics, including the role of CEO Ryan Cohen, store closures, the collectibles business, Bitcoin, and the potential for a so-called short squeeze. He notes that GameStop currently generates strong cash flow and holds substantial accumulated tax losses—nearly $1.2 billion—that will limit the tax burden on future earnings.

The investor also emphasizes that the company’s capital expenditures have been minimized to about one-tenth of 2014 levels, which he considers unprecedented from an investment maintenance perspective. At the same time, he points out that Ryan Cohen purchased a total of 1 million shares in just two days—a move Burry describes as significant.

According to him, Cohen controls both the company and the investment committee, which manages around $8 billion in cash. Burry believes the current strategy aims to raise additional capital and eliminate debt while preparing for a future acquisition. Such a deal, or a new Bitcoin investment amid a strong crypto market, could serve as a catalyst for another sharp rise in the stock.

“I believe in Ryan, I like the structure, management, and strategy as I see them,” Burry writes, adding that he is prepared to hold his position long-term.

Michael Burry’s early investment in GameStop back in 2019 is considered one of the factors that later contributed to the historic stock surge and the meme stock phenomenon in early 2021.