{"id":3615,"date":"2026-05-05T13:53:57","date_gmt":"2026-05-05T13:53:57","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/never-confuse-debt-for-creativity\/"},"modified":"2026-05-05T13:53:57","modified_gmt":"2026-05-05T13:53:57","slug":"never-confuse-debt-for-creativity","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/never-confuse-debt-for-creativity\/","title":{"rendered":"&#8216;Never confuse debt for creativity&#8217;"},"content":{"rendered":"\n<div>\n<div data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\">\n<p><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"xyz-data\">Michael Burry dumped his entire stake in GameStop after the company&#8217;s audacious bid for eBay , saying the deal&#8217;s heavy leverage shattered the investment case he had been building. &#8220;I sold my entire GME position,&#8221; Burry said in a Substack post late Monday. &#8220;Any which way I sliced it, the Instant Berkshire thesis was never compatible with &gt; 5x Debt\/EBITDA, never ok with interest coverage under 4.0x. &#8230; As a result, GME is the first sale since I started this Substack.&#8221; GameStop made an unsolicited, nonbinding offer to acquire eBay for $125 per share in cash and stock, valuing the online marketplace at roughly $55.5 billion. The proposal is a steep premium to recent trading levels, but also raises questions about financing. GameStop&#8217;s market capitalization is a little less than $12 billion. Shares of GameStop fell about 10% on Monday following the announcement, reflecting investor skepticism around the feasibility of the deal and the potential strain on the company&#8217;s balance sheet. GME 5D mountain GameStop over the past 5 days Burry, made famous by the &#8220;Big Short,&#8221; had thought that deal-making could transform GameStop into a version of Berkshire Hathaway , but decided that the company&#8217;s capital structure following the proposed acquisition was incompatible with his &#8220;Instant Berkshire&#8221; thesis. That idea was never consistent with the level of indebtedness required to pursue a takeover of eBay, he said. &#8220;Instant Berkshire did not contemplate anywhere near 5x+ leverage,&#8221; Burry wrote. &#8220;Never confuse debt for creativity.&#8221; Burry said the more likely outcome at the proposed valuation would push leverage to roughly 7.7 times debt to earnings before interest, taxes, depreciation and amortization \u2014 a level bordering on distressed, he said. He pointed to companies such as Wayfair and Carvana as examples of businesses that struggled under similar debt burdens. &#8220;Wayfair lived there for years, Carvana nearly died there and still might from such a start. Bath &amp; Body Works too. Those are the survivors. They are few,&#8221; he said. The offer for eBay is split evenly between cash and stock, with GameStop securing a $20 billion financing letter from TD Bank. That still leaves a yawning gap between available funding and the implied purchase price, leading to uncertainty as to how the deal would work. GameStop CEO Ryan Cohen gave few details in a combative interview with CNBC on Monday, directing questions to the company&#8217;s published materials. He said GameStop has the flexibility to issue equity to close a deal but stopped short of outlining a definitive financing plan. EBay confirmed that it received the offer in a statement Monday, and said its board would review it.<\/span><\/span><\/span><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Michael Burry dumped his entire stake in GameStop after the company&#8217;s audacious bid for eBay , saying the deal&#8217;s heavy leverage shattered the investment case he had been building. &#8220;I sold my entire GME position,&#8221; Burry said in a Substack post late Monday. &#8220;Any which way I sliced it, the Instant Berkshire thesis was never [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3616,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[3314,3315,995],"class_list":["post-3615","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-confuse","tag-creativity","tag-debt"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/3615","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=3615"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/3615\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/3616"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=3615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=3615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=3615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}