Michael Burry Exits GameStop Stake, Initiates Short Position on Palantir

Investor Michael Burry, known for his role in "The Big Short," has sold his entire stake in GameStop Corp. following the company's unsolicited offer to acquire eBay Inc. for approximately $55.5 billion in cash and stock. Burry expressed concerns that the proposed acquisition would significantly increase GameStop's debt, making it incompatible with his investment thesis.

In a Substack post on Monday, Burry stated that the deal would push GameStop's debt to more than five times its earnings before interest, taxes, depreciation, and amortization (EBITDA), with interest coverage below 4.0 times. He emphasized that such a capital structure was not aligned with his vision for the company.

Following the announcement, GameStop shares declined by approximately 10% on Monday.

Additionally, Burry disclosed that he has opened a short position against Palantir Technologies Inc., expressing skepticism about the company's valuation and business model. He indicated that he views the stock as overvalued relative to its fundamentals.

Burry also expanded his bearish positions by purchasing put options on the iShares Semiconductor ETF (SOXX), which includes companies like AMD, Broadcom, Micron, Nvidia, and Intel. He noted the significant rally in semiconductor stocks and expressed his bearish outlook on their current valuations.

Furthermore, Burry acquired additional puts on the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 index, and on Nvidia Corp., citing concerns over the AI data center market. He mentioned that his puts on SOXX, QQQ, Palantir, Nvidia, and Oracle constitute nearly 7% of his portfolio, with outright shorts on Palantir and Tesla accounting for another 2.5%.