Burry Puts 6% of His Portfolio in Build-A-Bear, Values Shares at About $60 to $65
Key Facts
Investor Michael Burry said he classifies Build-A-Bear as a “full position” representing 6% of his portfolio, describing the size of his personal investment in the company, not disclosing that he owns 6% of its shares. Burry wrote that at $25 a share, the stock represents an attractive opportunity in his view, based on his estimate that the company will earn about $3.50 per share in 2026. On that estimate, he sees the stock trading at about 7 times expected earnings. He also outlined an acquisition scenario at 10 times earnings before interest, taxes, depreciation and amortization, saying that could put the stock at about $60 to $65. Those figures remain Burry’s estimates and investment assumptions, while the company’s latest results point to operating pressures.
Build-A-Bear’s fiscal second-quarter 2026 results showed revenue of $115.3 million, compared with $124.2 million in the same period a year earlier. Diluted earnings per share fell to $0.70 from $0.94. Net retail sales declined 7.1%, while consolidated e-commerce demand fell 15.6% year over year. The company said a 220-basis-point decline in pretax margin reflected a 340-basis-point drop in gross profit margin. It attributed that to weaker leverage on occupancy costs and increased promotions, while lower selling, general and administrative expenses, down 80 basis points as a share of revenue, partly offset the decline.
The quarterly results follow a record fiscal 2025 for revenue, when the company reported sales of $529.8 million, compared with $496.4 million in 2024, marking its fifth consecutive year of record revenue. Pretax income was $67.2 million in 2025, versus $67.1 million the prior year. Diluted earnings per share also rose to $3.99 from $3.80. That earlier performance contrasts with the decline in sales and earnings in the second quarter of 2026. According to Benzinga, citing the company, teens and adults account for 40% of buyers, indicating that its customer base extends beyond children.
Build-A-Bear lowered its fiscal 2026 outlook, setting revenue at $500 million to $525 million and pretax income at $60 million to $68 million. The company said second-quarter results came in below its expectations and some wholesale opportunities could be delayed. The pretax income range includes an expected recovery of about $13 million in fees under the International Emergency Economic Powers Act. The company, meanwhile, expects related fees and costs of between $10 million and $11 million to continue. This inclusion balances the effect of the recovery against ongoing costs when assessing the annual outlook, which was lowered amid weaker quarterly results.
The company ended the second quarter of 2026 with no borrowings under its revolving credit facility, but cash and cash equivalents totaled $14.0 million on August 1, down from $39.1 million at the end of the comparable quarter in 2025. On expansion, the company expects net growth of at least 50 customer experience locations during fiscal 2026. Burry said he expects about two more difficult quarters for the company. That means his valuation bet comes as the company expects to continue expanding but faces declines in some demand indicators and margin pressure. The information provided did not specify a later date for the company’s results or a new outlook update.
The stock moved higher in the days before Burry’s remarks, with its closing price rising from $23.79 on October 23 to $27.48 on October 29, according to EL7 data. Benzinga had reported, during trading on Thursday, October 29, that the stock was up 8.68% at $27.35; that intraday price was recorded at a different time from the closing price. The move remains well below a prior closing high cited by Benzinga, at $75.85 in September 2025, before the stock traded near $25 when the report was published. Burry said positive news could move the stock quickly amid heavy short selling, but Benzinga also quoted him as expecting a few more difficult quarters.