Michael Burry Still Won't Buy GameStop's eBay Strategy — But Calls LULU Crash A 'No-Brainer'

• Michael Burry reiterated his concerns about GameStop’s eBay strategy.
• He said the latest developments at GameStop have not altered his view that the company is pursuing the wrong approach. 
• Burry said Lululemon’s steep decline creates a long-term opportunity. 

“The Big Short” investor Michael Burry believes GameStop Corp. (GME) remains on the wrong strategic path despite recent corporate developments, while arguing that Lululemon Athletica Inc. (LULU) has become attractive as a long-term investment after its steep share-price decline.

Burry Weighs In On GameStop, Lululemon 

In response to his Substack subscribers' questions, Burry expanded on his views on GameStop and Lululemon, explaining why he remains skeptical of GameStop's strategy while seeing long-term value in the athletic apparel maker despite its recent struggles.

In May, Burry sold all of his GameStop shares, saying the company's plan to buy eBay (EBAY) is too risky and added that the proposed $56 billion deal would leave GameStop with too much debt, making the company financially weaker over the long term. 

Burry had also said the company's current direction no longer matches his original investment thesis, which was based on GameStop using its cash to make disciplined acquisitions while maintaining a strong balance sheet.

Since Burry’s exit, GameStop has seen developments including Cohen's decision to abandon a performance-based compensation package, shareholder approval to expand the company's authorized share count, and GameStop's acquisition of roughly 9.8% of eBay, up from 5%, using existing cash rather than debt.

Replying to a user’s question about whether several recent developments had changed his investment thesis, Burry said the events do not affect his opinion because his primary concern is the company's broader strategic direction. 

“No, not much. This is about the wrong strategy in going after eBay. I can see why he wants it. But it is unlikely it works well for GME shareholders, I believe,” wrote Burry. 

GameStop stock edged 0.05% higher overnight, ahead of Monday. 

Lululemon's Stock Drop Makes It Attractive

A subscriber asked if Burry has taken into account Lululemon Athletica’s softening demand in the U.S., including lower website traffic, declining app downloads, heavier discounting through its "We Made Too Much" section and increased promotional activity in stores in his analysis. 

In his response, Burry said he incorporates such developments into his research, but they are only part of a broader investment process.

“Yes, but again, no real management, the stock has fallen a tremendous amount, really to a point where if there is an expectation LULU is remotely in its current form in 10 years it is a no-brainer,” said Burry. 

He has been advocating for Lululemon, projecting it as a “Patience Trade”, because the transition period before the new CEO takes over could delay major strategic changes. Burry believes Lululemon has become an overlooked value stock, arguing that investors are focusing too much on its recent setbacks and not enough on its long-term strengths. 

Lululemon Athletica stock inched 0.8% lower overnight, heading into Monday. 

On Stocktwits, retail sentiment around both GME and LULU changed to ‘neutral’ from ‘bullish’ territory the previous day. 

A user said that GameStop's cash and roughly a 10% stake in eBay alone nearly match its market value, suggesting the stock is undervalued.

Another user said, “Over $1.99M insider buy!$LULU triggers an extreme value alert as corporate giants load the absolute bottom!”

So far this year, while GME stock has gained 9%, LULU stock has crashed 44%.

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