GameStop surges after Michael Burry reveals he owns the stock

Shares of GameStop surged over 4% yesterday after Michael Burry, former hedge fund manager of “The Big Short” fame and current Substacker, announced that he’s been buying the video game and collectibles retailer recently.

The revelation came in Burry’s long-anticipated follow-up post on GameStop. The stock initially jumped in November when Burry tweeted about his history of being long the stock, and again in December as he teased a more thorough write-up of the experience.

Trading volumes in GameStop went parabolic after the news crossed the wires. As of noon ET yesterday, 11.9 million shares had changed hands, more than 6x the average by that time of day.

And while Burry said he’s “willing to hold long-term,” his ownership is spurring a big rush into short-term call options on GameStop. As of 12:20 p.m., call volumes had more than doubled their 20-day moving average, with the four most active contracts being calls that expire this Friday with strike prices of $25, $24, $20, and $23.

“I own GME. I have been buying recently,” Burry wrote. “I expect I am buying at what may soon be 1x tangible book value / 1x net asset value. And getting a young Ryan Cohen investing and deploying the company’s capital and cash flows. Perhaps for the next 50 years.”

The Takeaway

GameStop is a stock that has traded off of nostalgia, its exposure to things that are cool or entertaining, and leaders with big main character energy. And Burry’s the first injection of main character energy into the shares since Keith Gill, aka Roaring Kitty, came back to spur another meme stock rally in GameStop in the second quarter of 2024 and then disappeared almost as quickly as he’d arrived.