Michael Burry’s Take on MGM and Wynn as Improbable GameStop Acquisition Targets
Michael Burry’s Investment Moves Stir Speculation Around GameStop
Michael Burry, renowned for predicting the 2007 housing market collapse with his short strategy, has sparked fresh intrigue in the market. Recently, he hinted that GameStop might consider expanding through acquisitions, specifically mentioning MGM Resorts International and Wynn Resorts as potential targets, although their likelihood remains questionable.
GameStop Sets Sights on Ambitious Growth
Burry has been actively purchasing GameStop shares, moving beyond its reputation as a stock driven primarily by speculative rallies. He views his stake as a serious long-term investment, fueled by confidence in CEO Ryan Cohen’s vision. Cohen aims to exponentially increase GameStop’s value, focusing on transforming the company through strategic purchases.
To achieve such growth, Cohen is reportedly interested in acquiring undervalued companies with strong consumer brands and scalability. Among potential acquisition candidates, MGM and Wynn were highlighted as options distinct from previously rumored companies like ADT or Wayfair.
Financial constraints pose challenges, however. GameStop ended the latest quarter with around $4.5 billion in cash and access to roughly $11 billion when factoring in additional funding methods. While this sum approximates Wynn’s market valuation, it falls short of a comfortable purchase price. MGM, although smaller, would still require substantial financial backing beyond GameStop’s current resources.
Why MGM and Wynn Acquisition Remain Unlikely
While acquiring MGM and Wynn aligns with Cohen’s interest in consumer brands with steady cash flow, these deals face significant obstacles. MGM has expanded into digital gambling with investments in BetMGM and LeoVegas, which could complement GameStop’s e-commerce strengths despite limited casino expertise.
On the other hand, Wynn represents a tougher acquisition target. Focused on luxury resorts and international markets such as the UAE and Macau, Wynn has avoided expanding into online betting. Taking over Wynn would require entering complex, regulated sectors that are outside GameStop’s experience.
Burry himself acknowledges these difficulties and suggests Cohen might build a diverse portfolio of profitable companies rather than pursue a single major acquisition. This strategy further diminishes the likelihood of GameStop acquiring either MGM or Wynn. Additionally, Burry has divested from casino stocks, having previously held shares in MGM, Wynn, and Las Vegas Sands.
