Michael Burry Sells GameStop Shares After $55.5B eBay Bid Creates 7.7× Leverage
Michael Burry sold his entire GameStop stake after the $55.5 billion eBay bid would push leverage to about 7.7× debt-to-EBITDA, breaching his 5× threshold. The deal relies on a $20 billion TD Bank financing letter, leaving a substantial funding gap and triggering a roughly 10% share drop.
1. Burry Exits Entire GameStop Position
Michael Burry disposed of his full GameStop holding on Monday after determining that the proposed $55.5 billion acquisition of eBay would require debt-to-EBITDA leverage of approximately 7.7×, well above his acceptable 5× limit.
2. Financing Letter Leaves Funding Shortfall
The bid structure includes a $20 billion commitment from TD Bank, but this financing falls far short of the roughly $43.5 billion needed to bridge GameStop’s $12 billion market capitalization to the implied purchase price, exposing a significant funding gap.
3. Market Reaction and Strategic Implications
Shares of GameStop declined about 10% on Monday and continued to slide Tuesday, as investors questioned the feasibility of the deal and the company’s ability to fill the financing gap or issue new equity under elevated leverage conditions.