Michael Burry’s Build-A-Bear Bet Takes A Hit As Stock Suffers Worst Week Since COVID Rout – ‘I Spy An Atypical Turnaround Dance’

• Michael Burry said Build-A-Bear’s weak earnings and lowered commercial revenue outlook have raised concerns about its strategy. 
• However, Burry has not abandoned the stock, viewing it as an unpopular value opportunity. 
• He said the earnings report hurt his thesis and he will await its 10-Q before reassessing the stock. 

Build-A-Bear Workshop (BBW) stock plunged over 23% last week after the company cut its revenue outlook for the second time this year and terminated its chief growth officer’s tenure, raising fresh concerns about its strategy. The sharp selloff also prompted “The Big Short” investor Michael Burry to reassess his latest long position in the retailer, particularly as management works through weaker wholesale sales and traffic pressures. 

Build-A-Bear’s Earnings Outlook Raises Strategy Concerns 

In his Substack post published Aug. 29, Burry said Build-A-Bear’s recent performance raised concerns but stopped short of abandoning his investment case. He argued that Build-A-Bear’s unusual position within a broader group of out-of-favor stocks could still make it interesting.

“Build-A-Bear Workshop is the latest long position, and it almost fits right in with the BETS already in my portfolios. What immediately stands out to me is that Build-A-Bear Workshop recently had bounced hard off a July 2026 level, and that bottom coincides with a past all-time high achieved during January of 2005. 21 years and no return for the long-term holder.”

Shares of the stuffed toy maker dropped over 23% last week following the company’s fiscal second-quarter 2026 earnings update, as its outlook disappointed investors. Burry noted that some reduction in expectations could have been anticipated following the arrival of a new CEO, but said the market reaction was particularly severe.

“In my view, the takeaways from earnings are the commercial revenue guide down to flat, from +20% previously, as well as both the Walmart (WMT) non-renewal and international franchising falling by a third. This suggests strategy failure.”

Build-A-Bear Workshop stock inched 0.1% higher overnight, ahead of Monday, after clocking its worst week since the Covid pandemic rout in 2020. 

Burry Sees Build-A-Bear As An Unpopular Value Bet 

Burry’s larger concern involves what he sees as a departure from Build-A-Bear’s core appeal. The company built its business around customers creating and personalizing stuffed animals, but increasingly sold ready-made plush products to compete with popular offerings such as Squishmallows.

He argued that this approach may have weakened the distinctiveness of the brand while helping produce short-term sales gains. That backdrop helps explain the appointment of Chris Hurt as CEO in June. 

Despite the concerns, Burry highlighted Build-A-Bear’s plan to add at least 50 locations and to increase its capital expenditure target to $25 million given the company’s small size and the recent departure of its chief growth officer.

“I spy an atypical turnaround dance. There is a bit of a kitchen sink feel to the quarter, but that impression does not hold up very well to a review of the financials. No impairment charges, inventory write-downs.”

Burry said the latest earnings report weakened his investment case. He plans to wait for Build-A-Bear’s 10-Q filing before making a final decision or determining the stock’s value.

BBW Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. 

BBW stock has crashed 51% year-to-date. 

Also See: Why Did ESTC, TEAM, DT Stocks Hit 52-Week Highs Last Week?

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