Michael Burry targets Build-A-Bear short squeeze amid heavy bearish positioning

Investor Michael Burry has once again expressed confidence in Build-A-Bear Workshop, predicting that the struggling US retailer might see a short squeeze as bearish bets pile up, according to a Business Insider report. Burry, famous for foreseeing the 2008 financial crisis, pointed out that around 25% of Build-A-Bear's available shares are currently being sold short, with short interest reaching nearly nine days of average trading volume.

This situation could leave short sellers facing significant losses if the stock makes an unexpected recovery, forcing them to close their positions. Over the past year, Build-A-Bear shares have plummeted by over 50%, plummeting from a high above $75 to about $25. Despite this decline, Burry, who first revealed a long position in August, insists that the market is ignoring the company's operational improvements and growth potential.

In a recent Substack post, Burry highlighted the retailer's decade-long restructuring and expansion strategy, which has grown the company to 662 locations across 37 countries. The expansion includes 129 new locations added in the past two years, focusing on lower-capital formats like wholesale partnerships and smaller retail outlets.

Burry argues that this mix of depressed valuations, operational progress, and substantial short interest presents an intriguing investment opportunity, even as weakening consumer demand and pressure on discretionary spending continue to strain the retail sector.