Investor Michael Burry has reiterated his bullish position in Build-A-Bear Workshop, arguing that the struggling US retailer could be positioned for a short squeeze as bearish bets against the company reach elevated levels, according to a report by Business Insider.

Burry, best known for predicting the 2008 financial crisis, highlighted that approximately 25% of Build-A-Bear's publicly available shares are sold short, with short interest equivalent to almost nine days of average trading volume. The positioning could leave short sellers vulnerable to significant losses if an unexpected recovery in the stock forces them to close their positions.

Build-A-Bear shares have fallen by more than 50% in 2026, declining from a peak above $75 last year to approximately $25. Despite the selloff, Burry, who first disclosed a long position in August, believes the market is overlooking the company's underlying operational improvements and growth potential.

In a recent Substack post, Burry pointed to Build-A-Bear's decade-long restructuring and expansion strategy, which has seen the retailer grow to 662 locations across 37 countries. The company has added 129 locations over the past two years, increasingly relying on lower-capital formats such as wholesale partnerships and smaller retail outlets.

Burry argues that the combination of depressed valuations, operational improvements and substantial short interest creates an attractive investment opportunity, even as weakening consumer demand and pressure on discretionary spending continue to weigh on the retail sector.

The investment thesis highlights the potential risks facing hedge funds with concentrated short positions, particularly where improving company fundamentals could trigger rapid covering activity and amplify share price gains.