Before GameStop (GME +0.17%) went parabolic in 2021, The Big Short's Michael Burry spotted the opportunity. Known for his prescient bets on the collapse of the housing market prior to the Great Recession, Burry believed GameStop's business was significantly undervalued, despite the fact that the company's brick-and-mortar video game business was on the decline.
After trading in and out of the position, Burry would fully exit GameStop in late 2020. While Burry may have made strong profits on his trade, he missed the bulk of GameStop's meme stock mania. In recent weeks, Burry has made several cryptic posts about GameStop. Is the legendary investor about to back up the truck?
Image source: Getty Images.
"It was complicated..."
A lot has changed for Burry in recent weeks. In November, Burry's fund, Scion Asset Management, disclosed several bets against some of the largest artificial intelligence stocks like Palantir and Nvidia, sending a scare through the market. Shortly after, Burry said he was shutting down Scion Asset Management and launching a Substack, which, as of this writing, has over 116,000 subscribers, although the number of paid subscribers is unknown.
Retail investors are naturally excited about Burry's Substack because, instead of trying to decipher his infrequent and often obscure tweets, Burry will make many of his thoughts clear in Substack posts. On Nov. 27, Burry sent a thrill through many still loyal meme stock investors when he began discussing his past involvement with GameStop. Burry also posted several emails from 2019 between himself, Keith Gill (aka Roaring Kitty), and Ryan Cohen, the former founder of Chewy and now the CEO of GameStop.
Remember GME? Bet you did not know this. pic.twitter.com/lMU1OcAxM5
-- Cassandra Unchained (@michaeljburry) November 27, 2025
As you can see above, in 2019, Burry wrote a letter to GameStop's board of directors when the stock was trading for less than $4 per share. Burry wanted the company to complete a share repurchase authorization that could have removed 80% of the company's common shares from circulation, resulting in strong earnings-per-share accretion. Burry also sent a letter arguing that executive compensation in 2019 was "egregious," considering how much capital the company had destroyed through poor business decisions. Burry called for the resignation of several members of the board of directors.
On Nov. 27, Burry tweeted, "It was complicated with $GME. In some ways, I wasn't really done in 4Q 2019." That obviously got many of the old meme stock investors in the Reddit WallStreetBets crowd very excited that Burry might once again get involved in GameStop.
Is there a legitimate investment case to be made for GameStop?
Interestingly, GameStop reported strong earnings results for the second quarter of its fiscal year 2025 ending on Aug. 2. Net sales of $972 million increased 22%, thanks to strong growth in its hardware business for products such as the Nintendo Switch 2 and its newer collectibles business, which includes apparel, toys, trading cards, and other gadgets. Diluted earnings per share of $0.31 rose markedly from the $0.04 the company made in the same period a year ago.
GameStop also more than doubled its cash on the balance sheet, although that appears to have been funded by significantly more debt. The company also generated $117 million in operating cash flows during the quarter, up from approximately $68 million a year ago. All in all, while there are certainly still risks, GameStop's business appears to be improving. The stock trades at about 23 times forward earnings and 2.4 times forward sales.
NYSE: GME
Key Data Points
One area where I still have concerns with GameStop is that management has been investing in Bitcoin, attempting to employ a Bitcoin treasury strategy to some degree, similar to Michael Saylor's Strategy. When you see companies do this, it can indicate that management has run out of ideas and is kind of just throwing a Hail Mary. I also think many investors still view the company as a meme stock, and are in it for wild, unnatural gains, as opposed to the fundamental business.
If you want to invest in GameStop at these levels because you see upside in the core business, there may be a case to make. However, understand that if a significant meme rally causes the stock to double in a short period, invest with caution, as the stock will quickly fall into overvalued territory.
It's also important to note that we still don't know Burry's intentions yet. He recently wrote on Substack that he plans to post about GameStop sometime this month. "There are a number of good hard lessons in that one. And I have an idea for what GME should do now," he stated.
