An investor from The Big Short was buying Gamestop. Why doesn't he believe in the idea of a new Amazon?
GameStop, a chain of stores for gamers, has offered to buy eBay and turn it into a full-fledged competitor to Amazon
GameStop valued eBay at a roughly 20% premium to its closing value in recent trading / Photo: Sundry Photography / Shutterstock.comc
The American chain of video game stores GameStop has made an ambitious proposal - to buy eBay's marketplace for a price about five times its own capitalization. GameStop CEO Ryan Cohen told The Wall Street Journal that he wants to turn the online marketplace into a full-fledged competitor to Amazon.
Investor Michael Burry, who rose to fame as the prototypical "Game Down" character, invested in Gamestop back in 2019 but exited just 1.5 months before Reddit users snapped up the retailer's stock in a so-called trader revolt. In early 2026, Michael Burry said he owned GameStop stock and was increasing his stake. On Monday, he wrote on his Cassandra Unchained blog that eBay agreeing to a takeover would be a near miracle. Why doesn't he believe Cohen's plan is realistic, and what does he plan to do with his shares now?
Details
GameStop, which has a capitalization of less than $12 billion, has offered to buy eBay for $56 billion: half of the amount to be paid in its own shares, half in cash, including a loan of up to $20 billion from TD Bank. Burry admits that the final price of the deal could rise to about $65 billion, and the share of the cash part - up to 60%. In such a scenario, the debt burden of the combined company, according to his calculations, could grow to 7.7 EBITDA. The investor calls this level close to problematic: it reduces the company's ability to invest and usually deprives the business of flexibility.
Burry reminds us that deals built on high debt rarely leave companies room for error. Online retailer Wayfair, online used-car store Carvana, and body-care brand Bath & Body Works lived with high debt for years; Carvana, he says, nearly died because of that startup. In the case of GameStop and eBay, the risk is compounded by the fact that Cohen will need to simultaneously transform the business and service a large debt.
For this design to work, the combined company needs to quickly find a source of additional cash flow.
"Ryan must see the opportunities lying on the surface, although if colossal cash flows could be unleashed as if by magic, it would be reasonable to expect that eBay itself would have discovered them in its grand quest for cash to buy back whole mountains of its own stock. Over the past decade, the company has reduced the number of shares outstanding from 1.2 billion to just 444 million in one of the largest buyback programs in market history
Cohen, in his view, is suggesting that the market believes eBay can be turned into a business with hundreds of billions of dollars in potential, as Cohen claims. But even if he "miraculously" manages to close a $56 billion deal, that transformation will have to start with a debt load above 5 EBITDA and strong operational risk.
eBay vs. Amazon?
In addition, Burry doubts that the very idea of eBay competing with Amazon could work. Amazon retains shoppers through Prime, video service and same-day delivery. More than 70% of parcels are delivered by the company's own logistics network - in terms of last-mile coverage, Burry estimates that no one can match Amazon.
"Amazon has everything, and for decades the company has been investing in itself at a furious pace. Current spending is in the hundreds of billions of dollars a year. Now think about what eBay is. It has none of those things, and it's not even remotely close to Amazon - not physically, not in terms of delivery times
So the investor doesn't believe GameStop's real goal is to build an Amazon competitor. If Cohen really wanted to move in that direction, Burry believes, it would make more sense to buy Wayfair, which has warehouses and its own last-mile delivery. GameStop's main bet, the investor believes, has less to do with competing with Amazon and more to do with trying to take over the resale market for things ranging from collectibles to used electronics, clothing and auto goods.
Burry acknowledges that the collectibles and secondhand market could be big: some estimate it at around $100 billion, and Cohen probably sees potential for hundreds of billions. But in that logic, GameStop has to compete not with Amazon as a one-stop store, but with the players who control the resale, auction, authentication, and collector communities. That's where Cohen will have to prove that GameStop's physical network and eBay's online marketplace together provide an advantage the companies didn't have separately.
"I believe Ryan believes he is capable of doing it and I support the attempt. That said, I am not predicting failure, although it is certainly among the possible outcomes"
Burry admits that he will cut the GameStop position - in part or in whole - as early as this week.
Context
GameStop submitted a purchase offer to eBay on Ma. 3. The company is ready to pay $125 per share - about 20% above eBay's closing price at the last close of trading. The total value of the offer is about $56 billion: half of the amount GameStop offers to pay in cash, half - its own shares. eBay representatives declined to comment, writes Bloomberg.
Cohen told the WSJ that GameStop began assembling a position in eBay on Feb. 4 and now owns about 5% of the company. To finance the deal, GameStop has received a letter of commitment from TD Bank to provide up to $20 billion in debt financing. GameStop itself has about $9 billion in cash on its balance sheet, according to the WSJ.
If eBay's board of directors does not support the proposal, Cohen is ready to go directly to shareholders. In the eBay letter, he also indicated that after the deal closes, he would be willing to lead the combined company, receive no salary and be paid only based on business performance.
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This article was AI-translated and verified by a human editor
