Why GME stock surged over 8% today: Michael Burry says he's buying GameStop shares for the long term

GME stock today: GameStop shares jumped more than 8% on Monday after Michael Burry, the investor famous for betting against the US housing market before the financial crisis, revealed he has been buying the stock as a long-term value investment.

GME Stock Jumps Today After Michael Burry Reveals GameStop Investment

In a Substack post published Monday, Burry said he now owns GameStop and has been adding to his position recently. He described the purchase as a bet on valuation and leadership, saying that “I own GME. I have been buying recently. I expect I am buying at what may soon be 1x tangible book value / 1x net asset value,” adding, “And getting a young [GameStop CEO] Ryan Cohen investing and deploying the company’s capital and cash flows. Perhaps for the next 50 years," as quoted by CNBC.

GameStop Stock Rallies on Burry’s Long-Term Value Bet

Burry, who recently closed his hedge fund Scion Asset Management, stressed that his investment is not tied to a return of meme-stock speculation or a short squeeze. GameStop became a symbol of the meme-stock phenomenon roughly five years ago, when retail traders drove the shares sharply higher and forced short sellers to cover positions. Since then, the stock has given back most of those gains as speculative interest faded.


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Why Michael Burry Believes in GameStop Stock and CEO Ryan Cohen

He wrote, “I am not counting on a short squeeze to realize long-term value,” adding, “I believe in Ryan, I like the setup, the governance, the strategy as I see it. I am willing to hold long-term, and I am excited to see where this goes. I am fifteen years his senior, but not too old to be patient," as quoted by CNBC.

GameStop Stock Supported by Strong Cash Position From Equity Offerings

GameStop has used periods of heightened investor interest to raise billions of dollars through equity offerings, building a significant cash position in the process. Burry acknowledged the challenges facing the retailer’s core business, but said Cohen has been making the most of the situation by raising capital and waiting for an opportunity to deploy it.

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GameStop Stock Moves Higher Despite Challenges in Core Business

Burry wrote, “Ryan is making lemonade out of lemons. He has a crappy business, and he is milking it best he can while taking advantage of the meme stock phenomenon to raise cash and wait for an opportunity to make a big buy of a real growing cash cow business," as quoted by CNBC.

GME Stock and Bitcoin: GameStop’s Strategy to Protect Against Macro Risks

The company has also taken steps to diversify its strategy, including beginning to buy bitcoin last year. Cohen said at the time that the move was driven by macro concerns and the idea that bitcoin’s fixed supply and decentralized nature could offer protection against certain risks.

FAQs

Why did GameStop shares rise today?
The stock jumped after Michael Burry revealed he had been buying GameStop shares as a long-term value investment.

Does Michael Burry expect immediate gains from GME stock?
He did not suggest near-term gains, focusing instead on long-term value realization.