Michael Burry Ramps Stakes in Beaten-Down Stocks Like Adobe, PayPal Amid 'Mass Whale Fall' Phenomenon

The Big Short's Michael Burry is known for his contrarian trades and netting hundreds of millions of dollars during the 2008 global financial crisis by betting against the US real estate industry.

He recently shuttered his hedge fund amid AI bubble fears and has placed massive bets against tech leaders like Nvidia and Palantir Technologies, citing that market fundamentals do not align with his investment philosophy anymore.

Burry disclosed in a Substack post on Monday that he boosted his stake in multiple companies, including the largest Latin American e-commerce marketplace provider MercadoLibre, AI giant Adobe, payments provider PayPal, and athletic apparel company Lululemon Athletica.

Burry had mentioned that these stocks are part of the 'mass whale fall' phenomenon happening away from the main spectacle. His investment activities reflect a unique approach amid growing fears around AI, its impact on jobs, and privacy. Burry selected software stocks that have been sold off due to these fears.

The MercadoLibre stock is down 21.2% year-to-date, while PayPal, Adobe, Lulu stocks fell 23.9%, 26.9%, 42.1%, respectively, in the same period.

His confidence in the SaaS business model is evident, as he did not short Microsoft, potentially suggesting his belief in the long-term viability of the sector.

MercadoLibre 'Comes Cheap' Despite Robust Growth

MercadoLibre had over 120 million unique active buyers and 1 million active sellers by the end of 2025. The company primarily has its e-commerce operations and its fintech unit, which includes the payment platform Mercado Pago and the lending service Mercado Credito. With a market cap of over $80.4 billion, the company has presence in 18 countries, with 95% of revenue driven by Brazil, Argentina, and Mexico.

Burry highlighted that MercadoLibre's stock price rallied between 2022 and 2025, while its price-to-sales ratio largely remained unchanged. It means there is likely a gap between growth expectations and valuation. Burry believes that the stock is likely undervalued as investors did not re-rate valuation multiples despite steady growth in recent years.

Advancing share prices with an unusually stable price-to-sales ratio typically signals accelerating top-line performance. 'Mercado Libre is a clean long-term winner, and the stock comes cheap because it is not based in the US and does not operate in the US,' Burry had stated, adding that he bought the stock in the mid-$1,500 range, describing it as a modest allocation.

MercadoLibre delivered robust Q1 revenue growth of 49% year-over-year to $8.85 billion despite missing earnings expectations. EPS came in at $8.23, lower than consensus forecast of $8.47, implying margin pressures despite steady demand.

Wall Street brokerages also revised their price targets for the stock following Q1 results. For instance, Goldman Sachs cut its price target for the stock to $2,100 per share from $2,440 earlier but maintained a 'buy' rating on the stock.

UBS and JPMorgan also reiterated their 'neutral' ratings on the stock. However, UBS trimmed its price target to $1,750 from $2,050, while JPMorgan cut its price target to $1,900 per share from $2,100.

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