GameStop Explodes After Major Shorter Goes Long on the Company

According to Barron’s. big shorter Michael Burry is now long on video game retailer GameStop.

Shares of the company were exploding after Barron’s said that the ‘Big Short’ star was long on the game seller.

This has been a tough year for GameStop so far, losing roughly 70% of its value which is about $900 million from the company’s market capitalization.

Michael Burry told Barron’s Tae Kim that GameStop still has upside potential as Sony’s and Microsoft’s
upcoming consoles will likely have physical optic drives.

This will “extend GameStop’s life significantly,” explained Burry.

According to Burry, the rise of game-streaming competitors is “creating a perfect storm where things look terrible.” However, “it looks worse than it really is.”

Burry sent a letter to the video game retailer urging it to buy back nearly $240 million in stock with cash on hand. The letter also said Burry’s firm, Scion Asset Management, has a 3% stake in GameStop.

“Technical factors driving the stock to lows has created an opportunity for substantial buybacks at below private market prices,” he said to Barron’s.

GameStop’s “balance sheet is actually in very good shape,” Burry said to Barron’s in a phone interview this Wednesday. “I believe they will have the cash flow to justify a much higher share price.”

Disclaimer: We have no position in GameStop Corp. (NYSE: GME) and have not been compensated for this article.