The Guy From The Big Short Is Investing Big In GameStop

Illustration for article titled The Guy From The Big Short Is Investing Big In GameStop

Common wisdom in the video game world is that GameStop is on its way out thanks to the rise of digital distribution, but hedge fund operator Michael Burry, who made an unfathomable amount of money by betting against subprime mortgages, is all in. His fund even owns 3 million shares, or about 3% of the struggling retailer.

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Burry, best known as “that guy Christian Bale plays in The Big Short,” told Barron’s that he’s long on GameStop because the retailer’s “balance sheet is actually in very good shape.” He thinks that GameStop is currently at its lowest point, and that the company will bounce back next year when the PlayStation 5 and Xbox Scarlett—both confirmed to use physical media—start showing up in stores.

“The streaming narrative dovetailing with the cycle is creating a perfect storm where things look terrible,” Burry told Barron’s. “It looks worse than it really is.”

This tidbit of investing advice comes the same week as massive layoffs at GameStop, which has seen its stock plummet over the past four years. The company announced in January that it had given up on its attempts to sell itself, and its new c-suite has been looking to overhaul its business and salvage the company. As more and more people flock toward digital purchases, it’s hard to see much reason for optimism, but maybe, just like in the mid-2000s, Burry sees something we don’t.

Illustration for article titled The Guy From The Big Short Is Investing Big In GameStop

DISCUSSION

gemeni91
Gemeni91

I have bad news for Barry. Gamestop won’t be around in two years. Outside of plastic and cloth ThinkGeek junk and diminishing valued physical games, GaemStop does not have any valuable assets or Good Will. The Company should have been purchasing real property such as strip and shopping centers from 2008 to 2015, and revamping their stores in anticipation of the decline in physical media sales.

It’s too late to transition to the Mom+Pop retro video game store model, and even if they tried that a decade ago, they still have too many stores, too many employees and they are not competent to run that type of business.