Will Michael Burry Raise GameStop Stock Again in 2026?

Michael Burry has resurfaced with a candid confession that could reignite interest in GameStop (GME). The legendary investor behind The big short revealed in his Substack article that he sold his entire GameStop position in late 2020, missing the epic January 2021 short squeeze by just a few weeks. Burry held about 3 million shares of GME with a cost basis of about $3.32, but he was liquidated as the stock hit the mid-teens, leaving a potential billion-dollar windfall on the table.

Now he’s going back. In his detailed article titled “GameStop, The Prequel,” Burry provided technical analysis of what he called the only “legal market wedge” he had ever witnessed, explaining how retail traders used gamma compression to force market makers into panic buying.

Burry today announced an upcoming review of GameStop as an investment, noting that the company now has $8.8 billion in liquidity, strong free cash flow, and a revamped business model under Ryan Cohen’s leadership. Priced at a market cap of $9.9 billion, GME stock is down 27% in 2025. Notably, it has a 15% short interest, meaning short sellers own 15% of the total shares outstanding.

Burry describes it as being roughly similar to his 2018 thesis, but with figures ten times larger and Cohen running the show. The question investors face is whether Burry’s renewed attention is a sign of another big move or simply a post-mortem of what might have been.

In the third quarter of fiscal 2026 (ended in October), the video game retailer reported an operating profit of $41 million, compared to a loss of $33 million in the prior-year period. Its net income increased from $17 million to $77 million during this period. Importantly, GME ended the first quarter with nearly $9 billion in cash and marketable securities, up from $4.6 billion a year ago.

The turnaround results from aggressive cost reduction and strategic repositioning. Selling, general and administrative expenses fell to $221 million from $282 million year-over-year (YoY), a 21% reduction that led to higher margins.

GameStop continues to shed its underperforming international operations, exiting Canada and France after previously ending its operations in Germany and Italy. These changes reduced the store’s footprint but improved the profitability of the remaining locations.

In the fiscal third quarter, sales fell to $821 million from $860 million a year earlier as the product mix shifted toward higher-margin products. For example, the collectibles segment now accounts for 31% of sales, up from 20% a year ago, while traditional software sales fell to 24% from 32%. This pivot to higher-margin pop culture products reflects Cohen’s strategy to diversify beyond cyclical game releases.

Over the past nine months, GME stock has generated $410 million in free cash flow, which can be deployed across several growth initiatives. GameStop’s balance sheet has created a war chest for possible acquisitions or investments. The company also holds $519 million in Bitcoin (BTCUSD), making it one of the largest cryptocurrency holding companies. This bet adds volatility but aligns with Cohen’s forward-thinking technological vision.

Convertible debt issued during the quarter includes warrants that could dilute shareholders if the stock price rises, a detail that tempers the bullish scenario. Meanwhile, short interest remains high enough that any positive catalyst could trigger a further squeeze.

Michael Burry’s recent comment describing GameStop as having optionality through its convertible debt structure and massive cash position while operating like a melting ice cube perfectly captures the investment dilemma.

As of the date of publication, Aditya Raghunath had (directly or indirectly) no position in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on Barchart.com