Legendary investor Michael Burry has acknowledged that he missed the opportunity to capitalize on the unprecedented surge of GameStop Corp. (NYSE:GME) stock, which soared in January 2021. In a candid post on his Substack platform, Burry revealed that he sold his significant position just weeks prior to the stock’s dramatic rally, which is now regarded as one of the largest short squeezes in history.
Burry, who is renowned for predicting the 2008 financial crisis, disclosed that his firm, Scion Asset Management, exited its GameStop holdings in the fourth quarter of 2020. This decision cost him a potential profit of approximately $1 billion. Burry had initially acquired around 3 million shares of GameStop at an average cost of about $3.32 per share (pre-split), but he sold his entire stake when the stock price reached the mid-teens late in 2020.
Reasons Behind the Early Exit
Burry attributed his decision to concerns regarding activist investor Ryan Cohen. While Burry recognized Cohen’s potential as a “deep value investor” during a private meeting in 2019, he expressed skepticism about Cohen’s subsequent vision for the company. Specifically, he found Cohen’s November 2020 “tech-forward” strategy to be rife with “execution risk.” Preferring the more tangible returns associated with share buybacks over what he viewed as ambiguous digital transformation initiatives, Burry ultimately chose to divest his holdings, particularly as client withdrawals began to affect Scion.
In his analysis, Burry described the events surrounding GameStop as a “legal market corner,” a unique occurrence in his experience. He explained how retail investors employed a strategy known as a “gamma squeeze,” which involved purchasing large volumes of call options. This action required market makers, such as Citadel and Virtu, to acquire the underlying stock to maintain delta neutrality, thus driving the stock price even higher.
Reflections on Investment Strategies
In his Substack post titled “GameStop, The Prequel,” Burry linked his GameStop investment to an earlier purchase of Avanti, a troubled software company he acquired for a fraction of its value in 2001. He noted that his approach involved identifying undervalued companies, a strategy he initially applied to GameStop in 2019. Despite his correct fundamental assessment of the company, Burry admitted he was “blinded” by traditional valuation metrics and failed to anticipate the retail frenzy that would transform the once-struggling video game retailer into a global phenomenon.
As of now, GameStop’s stock performance has been lackluster. In 2025, GME shares have decreased by 27.95% year-to-date and 24.97% over the past year. The stock recently closed at $22.09 per share, reflecting a 4.05% increase on Monday, though it fell slightly by 0.32% in premarket trading on Tuesday.
Market analysts have noted that GameStop continues to exhibit weaker price trends across short, medium, and long-term outlooks, despite maintaining a solid growth ranking. For investors observing the ongoing developments in the meme stock landscape, Burry’s retrospective analysis serves as a sobering reminder of the unpredictable nature of market dynamics and the importance of timing in investment decisions.
