GameStop makes $55.5B takeover offer for eBay

https://www.bbc.co.uk/news/articles/cn0p8yled1do

by n1b0m • 3 months ago

712 693 3 months ago

bbc.co.uk

pjc503• 3 months ago

Important background: https://investor.gamestop.com/news-releases/news-details/202...

CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

hdgvhicv2• 3 months ago

Wouldn’t that debt knock down the market cap as much as the value

Otherwise take out a $20b loan and put it in the bank. Assets increase $20b, job done.

lesuorac• 3 months ago

Well, his argument is that he can remove inefficiencies in the combined company.

GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt.

sspiff• 3 months ago

There is precedent for this kind of trickery being played.

For example, Honeywell acquired Garrett AiResearch, a well known manufacturer of turbochargers for combustion engines, through a series of mergers.

Later on, it loaded them up with debt (over $1.5 billion, mostly asbestos related indemnity obligations from other parts of the business), before spinning them out as an independent entity again. Two years later, Garrett filed for bankruptcy claiming it was succumbing to the unsustainable debt burden placed upon it by its former owner.

ineedasername2• 3 months ago

Depends on how market cap is defined for the purpose of the contract. Typical definition is just against floating shares in the market * share price. Debt doesn’t factor in at all except in so far as it will influence investor confidence -> share price.

That said: conceptually it’s not an awful fit for GameStop. In so far as video games discs and cartridges were the main disposable belonging i had as a kid and the main target for new purchases, Funcoland was (later to become GameStop), if you squint your eyes, a brick & mortar eBay scoped to only video games. If you’d been an SV startup at the time pitching the eBay concept you could have said “it’s like funcoland, but online and for anything and also lets people sell peer to peer “

graemep3• 3 months ago

They are paying half in GameStock equity. They will issue new shares so they will buy Ebay of $55bn, but add only $20bn debt.

Its good for GameStock management who will end up running a much bigger business. https://investor.gamestop.com/news-releases/news-details/202...

Game Stock management is essentially claiming that they can run Ebay better than the current management so Ebay shareholders will end up better off by selling to Game Stock: they get some cash and shares in a business that will be mostly a better run Ebay. Very possible bad for GameStock shareholders who will end up with a smaller stake in a bigger business.

fontain• 3 months ago

Cohen is already rich rich, his GameStop compensation doesn’t really matter much. The eBay acquisition could be a strategy to juice his compensation but I think it is much more likely he does believe that he can achieve his stated aims, which will financially benefit him much more in the long term.

ascorbic• 3 months ago

I'm not sure the fact that somebody is already rich rich would make them less likely to perform ethically dubious practices to juice their own compensation. In fact I'd say the opposite is more likely.

idiotsecant6• 3 months ago

If there's anything rich people famously hate, it's making more money.

Forgeties7914• 3 months ago

Few CEO’s in the US are rewarded for longterm thinking when there are unsustainable quarterly gains to be made. GameStop also has a strange history, especially the last decade, that no one could possibly describe as “cautious” or “planning longterm.”

I also can’t name a single CEO who had the mentality of “I’m rich enough to make personal/financial sacrifices for the good of the company.” That’s simply not how things work. I’m sure an example exists but it would clearly be an exception to the rule.

acdha4• 3 months ago

Cohen is already rich rich, his GameStop compensation doesn’t really matter much

I think this argument is much stronger in the opposite direction: if his motivations were not focused on accumulating wealth, he’d be retired or running some kind of charity once he was that far past the point where he had to work. The fact that he’s not suggests that he derives his self-identity from wealth and the guys who do that are rarely satisfied at mid-tier rich.

SideQuark• 3 months ago

Market cap will price in the debt, as it always does. Empirical evidence (dig through Google scholar) finds that cash assets, debt, profits, settlements, and the like, all are reflected in market cap changes at over 99% accuracy (the 1% is from measurement noise, so it may well be 100%).

Making debt of that form illegal would kill any company that needed money to stay afloat, such as during some emergency, or war, or COVID, or tons of events that companies regularly survive.

bko2• 3 months ago

other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

This is silly. No different than buying a house w/ borrowed money based on using that house as collateral.

Banks aren't stupid. If it's very likely to fail and the interest doesn't cover the risk, banks won't risk. There's typically no upside to banks. At best they get their interest and at worst they lose everything.

ZiiS• 3 months ago

It is different. You need somewhere to live. Buying a second home with what would presumably need to be at least a 90℅ mortgage is at best questionable.

hdgvhicv2• 3 months ago

Banks aren't stupid.

If they can gamble with other people’s money then why won’t they.

If they can get rid of those liabilities by offloading them in a hidden way why wouldn’t they.

If it all collapses and the government bails Them out, oh well.

acdha4• 3 months ago

Banks aren't stupid.

Even a cursory familiarity with the history of the industry shows both that this is untrue but also that it’s leaving out many of the core reasons why finance is regulated. Bankers do make mistakes, but also their focus is on what makes them a profit now rather than what’s good for their client or the country long term. The bank does not care if GameStop goes bust as long as that happens after the loans are repaid or, most likely, sold. None of the guys who sold incredibly dodgy mortgages—if you weren’t in the market in the late-2000s, they would literally let applicants pencil in their income and not check it—went to jail for packaging those mortgages up so many times removed that they couldn’t reliably prove the loan even existed and reselling them with inflated ratings, and absolutely none of them had to repay their bonuses. Once they found a buyer for an “AAA” derivative, foreclosure was a problem for the retirement fund left holding it after a couple of sales.

That’s what I’d expect here, too: they’ll make some flashy announcements to juice share prices (“AI powered auctions paid in crypto!”) and sell that debt, spin whatever’s left into a subsidiary which splits off, and then profess complete surprise when that goes bankrupt.

jjallen2• 3 months ago

I’m disappointed and surprised you left out half of the conditions that grant him this compensation and only included one that suggests that all he has to do is buy a bigger company with GME stock:

“ The award is divided into nine tranches that are eligible to vest only if the Company achieves both a “Market Capitalization Hurdle” and a corresponding “Cumulative Performance EBITDA Hurdle”.”

This changes basically everything. He can’t just buy any bigger company. The company has to earn way more cash flow as well.

Aefiam• 3 months ago

It doesnt really change much, by buying a company its future ebitda will be included, it only delays the reward by some time. So yes he can just buy a bigger company

jjallen2• 3 months ago

I’m disappointed and surprised you left out half of the conditions that grant him this compensation. You only included the one that suggests that all he has to do is buy a bigger company with GME stock. It was literally the first paragraph of your link:

This changes basically everything. He can’t just buy any bigger company. The company has to earn way more cash flow, cumulatively, as well.

cj4• 3 months ago

I was under the impression that it was either or, not both. Either reach market cap goal or EBITDA.

graemep3• 3 months ago

The first two market cap hurdle is almost certain to be achieved, and the second should be easy (its less than current market cap plus value of new equity to be issued).

sheepscreek• 3 months ago

Taking a $20b loan from TD Bank + sitting on $9b CASH + GameStop stock for the rest. They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Smart if they can make it work.

Update: Numbers still don’t add to $55b - I think there’s a $14b shortfall. Not sure about how they are planning to fund that.

bhouston4• 3 months ago

They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment.

Is that really an advantage? Fulfilment is always handled by a lot of places for the big e-retailers for returns, which is similar to what eBay needs for sellers.

How much does Staples charge for its Amazon return fulfillment where you don't even need to wrap up the item?

I question whether it is advantageous to use GameStop stores for this or just to piggy back on what Staples is already offering to Amazon and others for their returns? Fulfilling returns for Amazon isn't significantly different to shipping eBay orders.

weard_beard4• 3 months ago

GameStop has a standing approved agreement to issue up to a billion new shares. If you read the offer you will see it is 50% financed by GameStop stock.

They threw him a hardball today in his cnbc interview on this topic. $GME stock value would plummet short term, but the combined company would revalue much higher.

Current Gamestop shareholders would be diluted. They would own, proportionally, a much small slice of the combined company, but at a higher price point.

The framing of this as, "Ryan Cohen is diluting Gamestop shareholders in order to meet the terms of his enormous pay package" is disingenuous though, as his pay package is all stock. He's diluting himself too. He obviously has faith that, long term, the value of the combined company can substantially grow.

andruby2• 3 months ago

A company doesn't need $55bn to buy a $55bn company. They can issue new GME shares and exchange $EBAY for $GME. These are sometimes called "stock-for-stock" transactions

archon8104• 3 months ago

Here's the GME CEO attempting to explain the deal https://x.com/i/status/2051303211668021478.

And "Attempting" is doing the heavy lifting here.

getnormality• 3 months ago

the should-be-illegal process of putting debt on the acquired company's balance sheet.

I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

consp2• 3 months ago

In the modern world if you are a bank you will be bailed out eventually, thus your problem becoming everyone's problem.

SpicyLemonZest• 3 months ago

The problem is that leveraged buyouts allow me to effectively inflict that debt on other companies, making a buyout offer the existing shareholders won't be able to resist and then reorienting its operations around servicing the debt I took out. In fact, lenders arguably favor this, letting me use the company I'm acquiring as collateral to acquire more debt at better terms than would otherwise be available.

sbarre2• 3 months ago

It's the problem of all the employees (and potentially customers) of the company being plundered.

They have no say in the matter, and given that the lender can probably absorb the loss without, you know, missing mortgage payments or losing health insurance, I would absolutely argue it's not just their problem.

You can certainly hold the opinion that "it's just business" but it feels like an unnecessary part of business that very often has real disruptive and detrimental effects on average working people, for the sole benefit of rich people getting richer.

And yes I get that it's not just a PE problem, but PE is a big one of these kinds of problems.

miltonlost• 3 months ago

The people who work at the bought-out company who will then be fired due to PE now gutting workforces to pay off the debt. Laborers are getting the shaft

nyeah6• 3 months ago

If it was just you personally, sure. But a bank failure affects lots more people than just the bank.

shmatt4• 3 months ago

The lenders get their money back via management fees. Pretty much only the consumers and the employees get screwed over

fasteo• 3 months ago

>> should-be-illegal process of putting debt on the acquired company's balance sheet

This is a basically a leveraged buyout (LBO). All private equity works this way. Yes, it should be illegal, or at least heavily limited.

I highly recommend this book: "Plunder: Private Equity’s Plan to Pillage America"

triceratops2• 3 months ago

Is it still "private equity" if a public company takes a loan to buy another public company?

taeric9• 3 months ago

I mean, it is functionally the same as home loans? Would you be proposing a carve out that buying a house or car is ok this way, but nothing else?

elzbardico3• 3 months ago

This book got a unfortunate title. Private Equity can be a completely legitimate activity. What it needs is some regulation on some underhanded financial tatics it uses, such as LBO.

CamelCaseName• 3 months ago

I read that book, and my recommendation is to skip the third act, which is painfully repetitive.

In fact, coming from a finance background, I didn't find the book in general to be particularly insightful, and much more ragebait / policy oriented (which makes sense given the author was a DOJ Antitrust prosecutor)

firebot• 3 months ago

It's absolutely an LBO. The leverage is maximizing debt to equity. That debt is then transferred to the new entity.

It's how they destroy companies while making billions in private profit. They over leverage them. Accrue debts. Sell of equity. Wash, rinse, repeat until bankrupt.

iamveen• 3 months ago

On the bright side, if the plebs start making money through LBOs, they might finally find the will to regulate.

seizethecheese• 3 months ago

I was curious about this, so I searched for the most authoritative study on private equity. Here’s what I got: https://journals.aom.org/doi/10.5465/AMBPP.2021.14309abstrac...

This says that private equity effect on employment is neutral and efficiency is positive.

So what gives?

pseudosavant• 3 months ago

I've been through an LBO before, my first thought when I saw this news was: so eBay is going to have to pay interest on a $50B loan now?

eBay had $2B of net income in the last year. That might get them half-way to paying their annual interest payment if this deal closes. Get ready for the inevitable layoffs to cover that interest payment.

rahimnathwani4• 3 months ago

Whether the acquirer or target borrows the money, this would not allow to increase the market cap of the company. It would increase the enterprise value (because the debt allows you to make a bigger acquisition), but not the market cap.

vmbm• 3 months ago

If the market is "efficient", then the debt should work against the market cap. For example if we assume a $50B offer at 50%/50% debt and stock, then we should expect the market cap to only increase by $25B. And for GME shareholders, they should expect their stock price to stay roughly the same because that $25B market cap would be offset by a corresponding increase in the number of shares. The debt would increase the enterprise value of the company, which is the more comprehensive metric to use when trying to value a company as it takes into account both debt obligations and cash on hand.

Of course the market may move the price up or down based on how much they like the merger. If they think there is some synergy here, they may move things higher. If they think the debt is too burdensome or have other issues with it, they will move the price lower. But all things being equal, any market cap increase of a buyout should be offset by the dilution that was incurred to finance the deal.

What looks like a "hack" here though, is that Cohen tied his incentive structure to market cap and not share price. The fact that his award is in the form of options and not RSU's does add some incentive for a higher share price, but at the end of the day, it looks like he can get 100% of his award by simply buying companies using dilutive stock issuance. Not sure how much the GME faithful appreciated that at the time of the vote. I think Elon did something similar in his incentive package.

Nifty3929• 3 months ago

It is not at all clear to me why people get upset about using borrowed money on the balance sheet of the acquired company.

Say company B wants to buy company A. Company A is worth $20B, but the buyer doesn't have that much, and the original owners/shareholders want to get paid. So Company A takes out a $20B loan, paying out the original owners, making that company worth $zero. Now Company B gets it - it's still worth zero because of the fat loan, but now Company B is the owner. I don't feel like anybody got taken advantage of in this financing model.

In fact, this is pretty close to what happens in the US real estate market. When I buy a house I take out a loan against that house. It's non-recourse, so it's very much like the house borrowed the money, not me. In any case, I got the house with a lot less money than the purchase price. Sometimes nearly zero from me in fact.

I do understand why people get angry about what often happens next - layoffs and such - but I think that's very independent of the financing used to purchase the company. The acquirer could pay all cash using money from it's own bank account, and then still lay a bunch of people off - and in fact that often happens.

chrisss395• 3 months ago

Yes...but isn't his employment contract structured to incent this kind of move? His pay is 100% at-risk in the form of 170M+ stock options that only vest if he hits some astronomical targets.

I'm just not sure his rationale is completely objective given such a structure...

conductr2• 3 months ago

I'm just not sure his rationale is completely objective given such a structure...

Which is why the board would have to approve the deal and he can’t act alone on it. He was hired to create and execute the strategy including finding the target. The real question is, why did he get hired to do something anyone could have done?

vasco• 3 months ago

The Gamestop CEO is an interesting character, he grew Chewy and sold it, did a massive play on Apple stock during the pandemic and used that to buy a 9% stake in Gamestop over time, rode the hype to accumulate $9B while turning the company around and closing stores that weren't profitable and making it a money making budiness again. And now they already own 5% of eBay on top.

Along the way he says some ridiculous Trump stuff and wasted a bunch of time on NFTs but the eBay play seems interesting at least. It's one of the best internet soap operas to follow. For comparison AMC was put in the same "meme stock" bag at the time and you can see how they managed to ride the hype. So it's not just memes.

Eldt• 3 months ago

He's a meme trader manipulating retailer investors, following Elon's footsteps

memaw12341234• 3 months ago

those guys have a very strong track record of getting their way lately

CWwdcdk7h3• 3 months ago

I mean he pumped and dumped BBB, and those people (or should we call them apes?) still love this guy.

dcminter• 3 months ago

I look forward to today's Money Stuff!

turtlesdown1114• 3 months ago

turning the company around

The revenue for Gamestop continues to decline, even if they are "profitable". The annual decrease in revenue continues. It's a dying business, it hasn't been turned around. The most charitable comment you can make about the company is that they've shrunk the business to align with their revenue decline.

https://stockanalysis.com/stocks/gme/revenue/

v4dm4• 3 months ago

What about the company's profitability? Did that continue to decline as well?

orlp4• 3 months ago

GameStop doesn't have (even close to) $55.5B. Their offer from the letter is literally impossible:

Our offer is $125.00 per share, comprising 50% cash and 50% GameStop common stock

Even if you magically included all existing GameStop stock in the offer, it still would not comprise 50% of $55.5B.

EDIT: looks like it's not impossible and I misunderstood. It's a proposed change of leadership with a $25B injection of cash to sweeten the deal. GameStop would issue shares which would capture the original eBay value (since GameStop would own eBay after the trade), making that part a wash. At least assuming people owning eBay stock currently would value the combined company at at least the sum of their parts, which is a big if.

airstrike5• 3 months ago

It's newly issued stock, a common form of making acquisitions cheaper

wongarsu2• 3 months ago

How is a 20bn company going to issue 27bn worth of stock? Or are they just going to pretend the newly issued shares are valued the same per share as existing stock is right now?

Lionga2• 3 months ago

Have your ever heard of debt? They have a 20B line secured from TD.

orlp4• 3 months ago

Yes, that goes into the '50% cash' part of the offer. With a 20B credit line and 7.5B cash from their own coffers (which they claim to have, so let's believe them on their word there), you cover the cash portion.

The issue is the non-cash portion of the offer. They claim that the remaining 27.5B is covered by GameStop stock. But that's more than double the market cap of GameStop.

ceejayoz3• 3 months ago

Isn’t that just a https://en.wikipedia.org/wiki/Leveraged_buyout ?

AureliusMA• 3 months ago

Yup.

croemer2• 3 months ago

The stock part is more like a merger than a buyout.

sigmoid10• 3 months ago

That's just for the cash part. The stock part makes no sense. For this 50/50 deal to work in principle, they'd need to issue around a billion new shares, which would massively dilute the existing ~450M shares. So Ebay shareholders would suddenly own 70% of Gamestop after the deal. It's also highly questionable if investors actually believe the combined stock is worth that much, so the stock price would probably fall and turn those 70% into >90%. At this point it basically becomes a reverse acquisition plus a large loan for the final company from the cash part of the deal.

Animats2• 3 months ago

Yes. See [1] for an overview of how this works.

When the SEC filing is made, we'll get to see how the deal is structured. The $20 billion from TD Securities becomes a debt obligation of the combined company. There's a tax break in equity to debt conversion, and a second tax break for carried interest. [2] There may be a preferred stock deal or debt refinancing so that TD gets their $20 billion back. Usually, the private equity firm exits within a few years.

[1] https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.23.1.121

[2] https://www.pgpf.org/article/what-is-the-carried-interest-lo...

JumpCrisscross3• 3 months ago

No, unless any control transaction using any leverage counts.

A third of the deal is financed with debt. A fifth is financed with cash. The bulk—fifty percent—is being financed with equity. An LBO would see debt and a thin tranche of cash finance the bulk of the acquisition.

gizajob11• 3 months ago

I don’t understand why eBay shareholders will suddenly want GME memestock and find any interest in voting for this.

bilekas2• 3 months ago

I don’t understand either but wouldn’t they still be owning eBay? Just with GME?

xbmcuser• 3 months ago

they will be getting 20% more than what Ebay is worth today

cyanydeez5• 3 months ago

man, those GME bagholders are gonna love diluted shares.`

CWwdcdk7h3• 3 months ago

They already increased total number of stock by +39% in last 12 months, GME will squeeze the last penny from those people.

pfdietz3• 3 months ago

They can sell now and pocket some extra money. What's not to like?

izzydata• 3 months ago

Perhaps that is part of the scam here. Meme stock buyers will think this means something and will spend more on worthless shares so that ebay executives can sell.

JumpCrisscross3• 3 months ago

GameStop doesn't have (even close to) $55.5B

When the merger concludes, the former shareholders of eBay will have $27.5bn of GameStop-eBay stock and $27.5bn of cash. (“Cohen said GameStop has a commitment letter from TD Bank to provide up to $20 billion in debt financing” and “GameStop has around $9 billion in cash on its balance sheet to put toward a deal” [1].)

[1] https://www.wsj.com/business/deals/gamestop-is-offering-to-b...

notepad0x90• 3 months ago

why do i keep seeing comments of this sentiment? can't they just take loans? I thought there were serious consequences to making an offer, and then backing out , especially if the other party accepts your offer.

solumunus5• 3 months ago

It’s wild to me that you believed that they would make an impossible offer.

dlcarrier• 3 months ago

Both stocks went up in value after the announcement, so it's a good sign that if it comes to it, eBay stock holders would vote for a merger, because they value the combined company at at least the sum of their parts.

jofzar• 3 months ago

I was seeing the news about this calling it GameStop eBay takeover and I assumed it was eBay buying GameStop and I was like, huh that doesn't really make sense for eBay to buy GameStop but maybe they want the physical locations?

How the hell can GameStop buy eBay, this is insane.

mrweasel• 3 months ago

The other way around made more sense to me as well. I don't see this going well for eBay, but I also don't entirely know how well their business is doing.

Here local eBay "clones" aren't in a good place and have been left as ghost towns after Facebook Marketplace.

moomin• 3 months ago

Very specific corners of the internet are losing their minds right now.

fuzzfactor• 3 months ago

A low tide leaves very few boats afloat, but these are lighter-than-air craft.

i_think_so2• 3 months ago

This very specific corner of the internet has no idea how your metaphor is supposed to work, which is why I like it so much.

TrackerFF2• 3 months ago

So they want to pay half of that with a meme stock?

maz1b• 3 months ago

Not a headline I ever thought I would see. Kinda crazy how meme stocks and retail hype has led to this.

HelloUsername• 3 months ago

Previous discussion: "GameStop Preparing Offer for eBay" https://news.ycombinator.com/item?id=47985271 68 comments

woodydesign• 3 months ago

From storytelling to investor POV, does it a good story to frame this as entering the AI era through a digital service that everyone familiar with?

manwithnoplan3• 3 months ago

A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true.

A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.

Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?

petesergeant• 3 months ago

Is it too much to ask the Hacker News commentariat to do one quick search

Are you new here?

dgellow8• 3 months ago

I see a single comment mentioning it is impossible. No sign of a collective declaration. I think you’re overreacting

manwithnoplan3• 3 months ago

I think you are under reacting.

lijok2• 3 months ago

There’s one comment as of the time of your post that makes this assumption - you could have replied to them directly.

manwithnoplan3• 3 months ago

It is implicitly implied in many comments.

rplnt• 3 months ago

Example from quite some time ago: Avast buying AVG. The value of AVG was around twice that of Avast.

ceejayoz3• 3 months ago

AOL/TimeWarner, Kmart/Sears… lots of prominent examples.

sschueller2• 3 months ago

But if it all goes sour nobody will be held accountable and two not one company are ruined.

I don't see how such leveraged acquisitions should be legal.

panick21_2• 3 months ago

Is there anywhere a good breakdown of these leveraged acquisitions. Like a video or something that breaks down how that exactly works and why its legal and why the acquired company goes along with it. Its seems like such a strange mechanism. And the history of it.

idiotsecant6• 3 months ago

They better not ruin eBay, it's actually a useful business, I use it all the time

Hackbraten• 3 months ago

A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.

Isn’t the assumption that it’s impossible intuitively justified if you have no background in finances? A small fish usually can’t devour a bigger fish either.

Also, all those terms you mentioned mean nothing to me. You can’t search for what you don’t know exists.

i_think_so2• 3 months ago

Speaking as someone who used to know absolutely nothing about the world of high finance, yes, it is too much to ask.

Before I started paying attention to such things I wouldn't have known a single one of those terms to even begin googling.

And let's be honest here. A smaller company saddled with big debt buying out an even larger company really doesn't make logical sense. It makes financial sense, which is subject to different laws of mathematics, probably involving the waiter's check pad in an Italian bistro.

vessenes5• 3 months ago

Agreed that Marvin would find this (and everything about Earth) ridiculous.

I propose this would make sense in the animal kingdom though; large, lumbering fatty walks along. It has big claws, but … it doesn’t look like it can be bothered to be dangerous anymore. Meanwhile a pack of hungry successful hunters walk alongside. To take this down, they will risk pretty much everything..

It’s the same story. The shareholders provide a sort of bet on if the big guy has still got it, or the risk-on hunters do.

That’s why the operational results got attention in Cohen’s letter — he’s telling Shareholders: “I turned around GameStop. I can turn this ship around, too.”

maxk422• 3 months ago

GameStop has zero debt and billions in cash on its books. It is not a stretch for them to be making this offer. It really does make sense here for both sides.

Forgeties7914• 3 months ago

I imagine the vast majority of us do not have a problem understanding smaller companies can buy larger ones. Most of us are just incredulous that anyone is taking GameStop, especially Cohen, seriously.

venusenvy47• 3 months ago

I think we also all assume that it is probably not a healthy feature of capitalism.

59percentmore22• 3 months ago

Why wouldn't they? Before he showed up, Gamestop had years of negative earnings per share. They haven't had a negative EPS quarter in almost 2 years, now. That seems like a serious turnaround.

protocolture2• 3 months ago

Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?

A quick review of the comments here would have demonstrated that it is.

schnitzelstoat• 3 months ago

I guess if people use eBay a lot to sell used games then there is something of an overlap there. Otherwise, it seems pretty weird.

harvey92• 3 months ago

That sneaker company that pivoted to data centers set the 'weird' bar pretty high.

GameStop has physical stores so could be a place to send, collect from or even verify high value eBay items.

fg137• 3 months ago

Based on my own experience with GameStop, that will convince me to stop using eBay completely.

gizajob11• 3 months ago

EBay is running a platform (very successfully) not a pawnshop.

crispyambulance• 3 months ago

...sneaker company that pivoted to data centers set the 'weird' bar pretty high...

"Weird" is the wrong word for Allbirds. "Fraud" is far more fitting. They obviously have no intention running an AI-datacenter business and are doing it for the stock-price rush. A small number of people will be laughing all the way to the bank, and everyone will forget Allbirds in short order.

Ebay has a history of being legit, though they have had a long list of uncanny acquisitions themselves (including Skype, which they later sold for a stiff loss). It's a pity they couldn't just execute on their core business and are now being acquired themselves by an entity using sketchy financial shenanigans.

Who's going to stop a few rich people with a pile of money and a stated intent of doing something they have no intention of doing? No one, I guess. I mean, there's plenty of examples. Supermicro is still listed on NASDAQ even though one of their founders was caught smuggling export-controlled GPU's in Supermicro servers to the tune of 2.5 billion dollars a couple months ago.

mchonedev• 3 months ago

If I understand correctly, I think the collectibles market is more in line with what GameStop is looking at here. They recently got into the trading card game including grading services via PSA.

dgellow8• 3 months ago

Is that market really that large? That sounds very niche, but I don’t know the collectible world

kome• 3 months ago

ebay is still "old internet", and genuinely useful and well built. enshittification is incoming...

consp2• 3 months ago

For an old internet company they sure know how to enshittify global selling with their Global Shipping Program also know as Global Shitting Program.

GaryBluto• 3 months ago

Have you used eBay in the last few years? It's awful for sellers and awful for buyers. This is coming from somebody who buys on eBay twice a month on average.

jitler• 3 months ago

It’s still way better than Facebook marketplace. At least eBay mostly solved the scam issue. Zuckerberg seems to desire fraud on his platforms.

radlad6• 3 months ago

What would make it better? My only complaint as a seller is fees. I have no complaints as a buyer.

The best part is eBay works exactly the same as 10 years ago, as far as I can tell.

thinkingemote• 3 months ago

I use it more frequently than Amazon for used books and DVDs. It's cheaper and the sellers are often exactly the same.

jollyllama2• 3 months ago

And yet, it's still the place to go to buy anything secondhand or used. I'd go so far as to say eBay could be nationalized under the Defense Production Act due to the critical role it plays in manufacturing by keeping obsolete manufacturing machines running.

jimz3• 3 months ago

It's not great for sellers either. I was banned during the time period before the Paypal divestment for having the galls to subpoena a nonpaying buyer's records. They take a cut from both sides. Sotheby's takes 10.5% (I think). eBay takes twice that for something comparable in value.

olalonde• 3 months ago

"I like the stock" - GameStop

sschueller2• 3 months ago

Are there still large shorts on GameStop? If this goes through I assume it will wipe those out?

fineIllregister3• 3 months ago

No. Short interest is at 15% and cost to borrow is .36%.

bilekas2• 3 months ago

If they can do some accounting trickery to pull this off then they deserve it. Makes zero sense to me but I did not think GameStop had even close to that in assets.

hdndjsbbs3• 3 months ago

It's the leveraged buyout playbook. You buy a company and use its own assets to secure a loan. Then you "find efficiencies" (strip it for parts to pay yourself and the creditors).

59percentmore22• 3 months ago

In this case, if the deal goes through at the price given, eBay's liquid assets are untouched. The cash portion is paid out entirely through the loan and Gamestop's cash.

wigster• 3 months ago

i don't understand why ebay looks SO terrible. It seems like some broken website where css failed to load.

techterrier• 3 months ago

is this for real? Or just to get gamestonks back into the news for another whirl on the wheel of meme?

Ekaros2• 3 months ago

They have managed to raise lot of money and don't have any proper ideas what to use it for. So this might not be worst possible way.

seydor• 3 months ago

I believe ebay should put itself up for sale on ebay instead.

TonyTrapp• 3 months ago

Auction or "buy now" with price suggestion?

mghackerlady2• 3 months ago

I once saw a pair of "very used" ready-to-rumble promotional boxers for bidding at $99 or buy it now for $1300

traderj0e3• 3 months ago

GameStop would buy it and then not even pay, then eBay would be like wtf now I have to relist myself

itomato2• 3 months ago

Oh, the GMV bump would mean a nice bonus

rasz• 3 months ago

Reminds me of Sierra On-Line being acquired by CUCk International in 1996.

sgt• 3 months ago

That was a sad story. Al Lowe talked about it a couple of years ago on a German podcast.

oybng• 3 months ago

With the state ebay is in, I'd welcome anyone else to run it

jollyllama2• 3 months ago

I know what you mean, but I highly suspect there's room for it to get worse.

traderj0e3• 3 months ago

eBay is too easy to take for granted if you've never tried buying or selling things on FB Marketplace or Craigslist. Having people over the internet trade things with minimal middleman is a really hard problem, and someone will always get scammed somewhere.

ulfw• 3 months ago

Every day our world is becoming just that tiny little bit more stupid

kibwen3• 3 months ago

Not true, on many days it becomes enormously more stupid.

adam_patarino• 3 months ago

Diamond hands?

Frieren• 3 months ago

Most business nowadays is related to financial transactions instead of building new products or services

The real economy seems to be burning but Wallstreet acts as if it didn't matter.

StilesCrisis• 3 months ago

Data center build-outs and AI investments are huge. They make the combined numbers look almost normal, but if you're not in the data-center construction business, the US is already in a recession.

aykutseker• 3 months ago

2021: a Reddit short squeeze kept GameStop from going under. 2026: GameStop is bidding $55B for eBay, a company 4x its size. If it lands, this might be the strangest full circle moment public markets have ever produced.

doginasuit• 3 months ago

Is it still riding the meme stock wave or has GameStop made a turnaround?

trillic• 3 months ago

Liquid Assets:

May 2020: $570.3 million

Jan 2026: $9.013 billion

nancyminusone• 3 months ago

I believe it is still a meme stock in the dark, "lose money quickly" corners of the internet.

Imustaskforhelp• 3 months ago

Another interesting observation to me is not that Gamestop was able to go from this full circle moment but rather the fact that Reddit has such influence that it was able to create the conditions which led here.

If Gamestop is the king, then reddit was the king-maker.

pfdietz3• 3 months ago

Is this going to turn Gamestop stores into something like those "sell it on Ebay" stores?

parrellel2• 3 months ago

No, its going to give the CEO and some shareholders a few billion and destroy eBay. Because we can't have nice things.

I am so painfully sick of this.

threetonesun2• 3 months ago

eBay isn't doing itself any favors these days, the site seems to have issues on a regular basis and they're heavily promoting collectible/gambling garbage on the site. If anything eBay and GameStop seem perfect for each other.

oompydoompy74• 3 months ago

Can we please not? eBay is one of the few places I still enjoy on the web.

JumpCrisscross3• 3 months ago

The offer letter: https://www.sec.gov/Archives/edgar/data/1326380/000119312526...

blks• 3 months ago

Famous grifter Ryan Cohen is back in business. Time to collect more money from reddit

BoggleOhYeah• 3 months ago

Why not? They haven’t left him even as he’s done little but dilute them to stockpile cash.

ramon156• 3 months ago

Wonder what Shkreli thinks of this.

parrellel2• 3 months ago

I was just thinking how nice it was to still get used stuff on eBay and now Mr. McMemeStock is going to kill it to extract a few billion for himself.

Yay.

avonmach• 3 months ago

GameStop is going to acquire BestBuy

Forgeties7914• 3 months ago

GameStop is not a serious company and I can’t believe some people still buy in to their hype nonsense.

throwaway2037• 3 months ago

There is no way that this deal will go through. However, it is good publicity stunt! Their offer is only 20% above the current share price, and they don't have nearly enough funding to complete the transaction. I would love to know what rate TD Securities is willing to lend? What would be the spread over 3month USD LIBOR? I assume 300-500 bps.

wclockdash• 3 months ago

Great discussion. Curious what others think about the intersection of productivity and browser tooling here.

snitty• 3 months ago

55.5B

Is this offer on a timer?

bhouston4• 3 months ago

This is just a leverage buyout and it will likely result in the slow death of both parties while there is value extraction for those in control. Think Sears, Toys R US and similar.

The CEO has a very specific deal where he gets paid significant compensation for specific valuations, which this is likely to achieve. That is value extraction at the cost of shareholders who will be on the hook for the leveraged loan and which will likely wipe them all out over time.

v4dm4• 3 months ago

Gets paid compensation in stock. So if shareholders lose value, he does too.

ball_of_lint10• 3 months ago

Not exactly,

https://investor.gamestop.com/news-releases/news-details/202...

He has to hit both the market cap and EBITDA for each tranche of his compensation plan to vest. He could do this by growing the core business, or by doing a merger like the proposed eBay one. Even if such a merger was very dilutive, even value destroying, it could help him vest a tranche he otherwise would not, for more value than the dilution reduces his position.

To be absolutely clear, I hope+think in practice that he is aligned with shareholders, especially given that the market cap restrictions appear much easier to hit than the EBITDA ones, but it's important to be precise because there's so much misinformation going around.

teknologist• 3 months ago

Is eBay just a hive of scams now? Try searching for a Mac Studio with 512gb of RAM for example. I know it's a highly sought after item, but there are so many sellers with 0 reviews supposedly selling these at suspiciously low prices. What's going on here?

jakemauer• 3 months ago

Same thing if you search for a PS5 Pro. And I have no idea how these aren’t taken down.

cdaringe• 3 months ago

I bought some dope weight lifting shoes last week. 46 bucks after shipping, 175 new. I’m pretty stoked on that. I was looking for a 3090 recently too and i did see the 0 rep sellers with buy it nows 10% under market value. That was a little sus. Nonetheless https://www.ebay.com/help/policies/ebay-money-back-guarantee... is a thing?

zx8080• 3 months ago

So their crypto investment did not work out? Who would have thought! https://www.bloomberg.com/news/articles/2025-03-26/gamestop-...

Ritewut• 3 months ago

Their bitcoin investment is what kept them profitable at times. Same as Tesla.

ball_of_lint10• 3 months ago

They can't include it in EBITDA

v4dm4• 3 months ago

It did, actually!

giancarlostoro2• 3 months ago

The original shorting of GameStop back in 2021 gave them a bit of a boost back into the green. While people were doing the GME to the moon, GameStop made more shares to sell, and paid off a bit of its debts, I think it made about a billion dollars in profit, they're still struggling, but it helped prolong their life.

A friend of mine also pointed out and this made it click for me that it makes 100% sense, GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.

This merger in theory could be good for both eBay and GameStop if they don't mess it up. Imagine being able to list your eBay items locally without having to have people needing to come to your house, or better yet, getting a cut of what you wanted up front since they're basically a pawn shop, and then they list it on eBay and turn a bit of a profit with a local pickup option available.

I could see this working out decently, assuming the CEO of GameStop doesn't mess it up completely.

dgellow8• 3 months ago

I thought the point of eBay was to get rid of that middleman. Wouldn’t that be something eBay would have done at some point if they wanted to own a pawnshop? Not saying that cannot work but that doesn’t sound like a genius idea

metalliqaz• 3 months ago

Yes, exactly. In fact there were some ebay "helper" companies that made a go of it in the early 2000's. They went out of business because it doesn't add enough value. USPS created Media Mail and flat rate boxes, and UPS stores are found in nearly every community. They handle the hard part (shipping) well enough.

The only thing I can think of is Gamestop positioning to become a clearing house for fan swag or gaming items the way Woot is for Amazon overstock.

spaqin• 3 months ago

Over time, eBay has become the middleman - with international shipping centres, basically escrow service with buyer protection, and rather high fees for promotion and of course, the actual sale. No middleman is something like Craigslist or FB Marketplace.

antasvara• 3 months ago

I think the difference is that GameStop already has this network of pawn shops, and those stores are doing enough business to justify their existence (at least somewhat; GameStop wasn't doing great before all the craziness). I could see something like the UPS kiosk in my local Walmart working; if you offered eBay returns at GameStop stores, you would be adding revenue without needing to justify an entire store to it like eBay would have needed to.

There's also the synergy that GameStop now has access to more used gaming inventory, a category that I'm led to believe is high margin for the stores.

dangus• 3 months ago

The part you’re almost touching on but not directly mentioning is the trading card and collectible marketplace.

GameStop would probably be gone by now despite the meme stock if it wasn’t for trading card games and other similar collectibles, and eBay is very involved in that market.

pjc503• 3 months ago

and then they list it on eBay and turn a bit of a profit with a local pickup option available

Sort of wondering why nobody did this already. I know that the better charity shops do this with rare and unusual books/records. The UK equivalent CeX has an online offering through webuy.com, which appears to be a Chinese owned multinational.

knowaveragejoe• 3 months ago

This is called consignment and is an industry unto itself, usually for antiques since you need a lot of space. You give them your goods and they sell them. You get a cut if they actually sell.

I'm surprised nobody has really mentioned this in the thread. Does anybody remember the "trade in anything" day GameStop just had? https://www.usatoday.com/story/money/2025/12/08/gamestop-tra...

Obviously they're going to need to liquidate a lot of this stuff. It can be quite lucrative if done right. You're basically getting inventory for free.

shmatt4• 3 months ago

eBay is dying, new competitors are being created constantly, and the big ones like Poshmark are getting more North American buyers and sellers. eBay has barely grown since their post covid slump

Maybe eBay survives as an international site but even at that point, with $20B in debt this will just follow the regular PE playbook of shutting down after many layoffs and pivots

The entire concept of, "I have $1,000 in the bank, im going to buy a $10,000 company, but the debt will be on the companies name, not mine" needs to pass. Can you imagine if the mortgage was owned by our home, not ourselves. And we could stop paying it without any personal consequences

If you want to buy a $50B company, you should pay $50B (loans are fine, but not putting the new company in debt)

cjbgkagh• 3 months ago

As a side effect of bailing out banks they have a lower risk profile than entities that don’t get bailouts. It’s essentially an additional subsidy on top of the already generous ‘money creation’ they’re allowed to do. It’s impossible to compete against this. The riskier the bets the stronger the subsidy so of course they’ll crank risk up to 11. Since the fate of banks and pensions are tied you can’t punish the banks without also punishing pensioners and pensioners are a strong voting block. It’s a distorted economic system that can only either crash or become more distorted. Since becoming more distorted enriches the already wealthy then that’s the only option that will be taken. The only thing that can stop it is to run out of resources to spend trying to save it. Importing a large number of foreigners is a rather creative (desperate) solution. I don’t know how long this will last but I’m confident I will see a major economic calamity in my lifetime.

dingaling• 3 months ago

Maybe eBay survives as an international site

I don't really know what alternative there is to eBay as an 'everything shop'. I can get specific screws there, or diff fluid, or a customised motorhome name sticker, or an old baseball cap for an airshow I attended in 2008.

And if I bought the wrong diff fluid I can sell it.

The main value over Amazon, though, is that the search works.

c222• 3 months ago

Who should take out the loan if not the new company? The old company? What would be the difference?

crazygringo5• 3 months ago

I mean I don't love eBay, but it's certainly not dying, where did you get that idea? Its revenue has continued to grow every year post-COVID, and competitors all face the central challenge of eBay's network effect.

It's not experience massive growth but that's because it's a pretty mature market by this point. People who want to sell their stuff already use eBay. It works. It's mature.

HWR_142• 3 months ago

Can you imagine if the mortgage was owned by our home, not ourselves. And we could stop paying it without any personal consequences

To a large degree you can just stop paying your mortgage.

The biggest personal consequence is you will be evicted and lose both your place to live and any equity you built up.

The other main consequence is it will show up on your credit report for 7 years. Maybe some specific forms ask "have you ever been foreclosed on" in the future.

wombatpm• 3 months ago

Once you own the company you take out loans to pay a onetime dividend to you to pay off your purchase loans. Same thing perfectly legal

pcdevils• 3 months ago

Leveraged buyouts are a fucking disease

rahimnathwani4• 3 months ago

"I think it made about a billion dollars in profit"

It raised over a billion dollars of capital (i.e. issued shares in return for cash). It did not make a billion dollars in profit (and has never had a year when it did).

whamlastxmas• 3 months ago

The TLDR for people who don't intuitively understand why: existing shareholders are diluting their stake in the company by issuing new shares and getting money for those new shares. It's simply selling part of the company. Not profit.

asynchronous13• 3 months ago

Key financial results for Gamestop from the recent fiscal year (2025–2026) include:

    Net Income: $418.4 million
    Gross Profit: $1.196 billion
    Total Revenue: $3.63 billion
    Operating Income: $285.9 million

Veedrac• 3 months ago

You can't normally describe it as profit because stocks by rule trade at a fair price, but it's surely reasonable to consider in this case GME making a profit from the squeeze given they were selling a good well above fair acquisition price.

jnellis• 3 months ago

Was this not lampooned directly in "40 Year Old Virgin" where a young Jonah Hill tries to buy some disco boots at an ebay store but can't because you have to go through the website.

radlad6• 3 months ago

https://www.youtube.com/watch?v=uGxRg5I7r5s

kingleopold• 3 months ago

GME moon and all that in 2021 was financial engineering and mass media coordinated BS btw. they were all reporting it in same week with never seen details, with creating BS narratives. but you all consume and believe the details of it? good work by the engineers, nothing more.

Same for FAANG BS, ZIRP BS writing made by millions of bots online. Even before llms

hmmmmmmmmmmmmmm• 3 months ago

People want to believe a 'cool' story, not that they got duped.

jeffwask• 3 months ago

It creates the "Ebay Store" from the 40-year-old virgin makes sense if you look at it that way.

turtlesdown1114• 3 months ago

I could see this working out decently, assuming the CEO of GameStop doesn't mess it up completely.

So far he's failed to improve Gamestop's core business, which is still in decline, even with the memestock cash gusher.

No one goes into Gamestop anymore, and they won't start because of eBay.

Hilliard_Ohiooo• 3 months ago

Just bought a used switch there yesterday, 2 guys are selling or trading some kind of game card, kid and his dad getting a PS4... Like you say, no one goes to game stop anymore, it's too crowded ;)

crazygringo5• 3 months ago

GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.

It doesn't though. eBay could easily set itself up as a legal pawnshop in every state if it wanted to. It doesn't because there's no advantage to doing so.

There are already third-party sellers in many areas who will take your physical merchandise and sell it on eBay in exchange for a cut. eBay doesn't need to enter that market, it's simply not profitable enough.

hnav2• 3 months ago

There's friction though, if the process is under one roof end-to-end, ebay can take 30-40% (15-20% today) of every transaction by just letting you dump your old stuff. Might even eat FB marketplace and CL.

digitaltrees2• 3 months ago

But the brick and mortar distribution is hard to build and gives a structural advantage. As another poster pointed out, you could sell your items locally and not need to deal with shipping, communication with buyers and other stuff. It would reduce friction which might actually expand the marketplace significantly. I personally have multiple family members that throw stuff away because listing on eBay is too hard and pawnshops too sketchy

shaftway3• 3 months ago

You're right that there's no real advantage to eBay buying a pawnshop conglomerate, but a pawnshop conglomerate buying eBay gets a massive advantage. They're already sitting on a mountain of used inventory, and at some point a lot of it will be thrown away because there are no local buyers for it. Having a commission-free way to offload that inventory would be huge for them.

chirau• 3 months ago

The picture that comes to mind when i picture a GameStop/Ebay merger is that woman's store in 'The 40 Year Old Virgin'.

jancsika• 3 months ago

The original shorting of GameStop back in 2021 gave them a bit of a boost back into the green.

IIRC, the short (borrowing stock, selling high, waiting for a downtrend, then buying low to pay back the borrowed stock buy an agreed date) was accelerating the fall of GameStop's stock price.

Then some Reddit knuckleheads noticed the hedge fund shorting GameStop was over-leveraged. They also found the deadline the hedge fund had to repay those shares to the bank.

The knuckleheads pumped the stock. Technical term: I like the stonk.

The knuckleheads then bought and held GameStop stonks. Institutional investors joined in. The hedge fund was legally obligated to pay any price to buy back the shares necessary to pay back the loan by the deadline. So the longer everyone else held on to the stonk, the more the hedge fund would be forced to pay. Squeezing the hedge fund in this way caused the stonks' price to temporarily skyrocket. Technical terms: hodl and rocket emoji

The original Reddit knuckleheads eventually stopped hodl'ing and sold high.

IIRC the hedge fund eventually went under.

Unfortunately, like all things, the knuckliest of Reddit heads would keep hodl'ing all the way back to the ground[1], hoping to cargo cult another squeeze by building wooden towers and dirt tarmacs to entice the sky rockets back. I'm not a stonk hodl'er, but I'd guess they are predominantly the ones who provided capital for Gamestop to buy Ebay. It's probably the most expensive and baroque way to fund a new consignment shop in your home town.

1: is there an emoji for a rocket crashing toward the ground? If not, there should be.

59percentmore22• 3 months ago

Eh. The capital was provided by various share offerings and, most recently, a bond sale, which retail probably and definitely did not buy, respectively.

But here's the fun part. All of those issuances were made during periods of weirdly high prices. The biggest one was this time 2 years ago. The price jumped to $80. Doesn't seem like much, but there was a share split in 2022, 4:1. Between that and the offerings, buying the same proportion of Gamestop The Company as one share did in late January 2021 would have cost about... $350? The intraday high from 2021? Weird. Oh, but it happened in after-hours. When non-institutional traders usually aren't active...

I don't think anyone truly knows exactly what's going on with Gamestop's stock price.

tech_jabroni• 3 months ago

Ah, so Catherine Keener's "We Sell Your Stuff On eBay" store from The 40-Year-Old Virgin is back, and now it's worth $55B. Always knew she was a visionary.

giancarlostoro2• 3 months ago

After I wrote my comment I thought about that haha

thaumasiotes• 3 months ago

or better yet, getting a cut of what you wanted up front since they're basically a pawn shop, and then they list it on eBay and turn a bit of a profit with a local pickup option available.

More than 10 years ago eBay tried to launch a program where they would buy your stuff and then list it themselves, but it didn't work out.

qaq4• 3 months ago

thinking back to 2021 it really shows we need some reform around brokers being able to land their customers stock to short sellers without any kind of consent. Also same shares should not be shortable multiple times ...

brian-armstrong• 3 months ago

What? Most (all?) platforms let you opt out of this, and you receive payment when your shares are borrowed. And shares are fungible, how would it matter if one share is borrowed by 10 people or by none?

Melatonic• 3 months ago

Or they screwup eBay and saddle it with tons of debt and raise the selling fees massively

archon8104• 3 months ago

assuming the CEO of GameStop doesn't mess it up completely.

This guy? https://x.com/i/status/2051303211668021478

Surely, he's a safe bet, no chance he will mess up this deal!

cj4• 3 months ago

I watched that interview live this AM and was so confused. The CEO looked annoyed and pissed the entire interview. Kept answering questions with “it’s on our website [awkward silence]”

It almost seemed like he was incredibly hung over and didn’t sleep last night.

But I got the feeling he was being a jerk on purpose. Still don’t understand why though.

thefounder• 3 months ago

But eBay is just bad company with a bad reputation. Why would they buy it instead something like Etsy or make their own thing? If you would ask me what are the worst companies from the “old guard” I would name eBay and PayPal as prime suspects.

avemg• 3 months ago

Because Etsy is not a general second-hand marketplace. Its niche is artisans making small batch items. And making your own thing at the scale of ebay is not exactly a small feat.

dawnerd3• 3 months ago

They would lose sellers in a heartbeat, myself included. The eBay fees are bad enough as it is, throw in whatever insane amount GameStop would take and it would squeeze everyone out.

eBay isn’t the same individuals selling one off things like it used to be. Sellers are established businesses.

trollbridge7• 3 months ago

And by “paid off a bit of its debts” you mean paid off its debts entirely, most of which were at 10% junk bond yields.

They later raised new special types of debt instruments tied to crypto much like Micro Focus did that are at 0% interest rates.

The company also went from years of consistent net losses to consecutive years of consistent profits.

crowcroft• 3 months ago

Mergers between public companies are almost entirely negative outcomes for shareholders and positive outcomes for the executive team.

Any possible 'synergy' is wiped out by.

- Having to pay a premium on the public market.

- Organisational complexities/moving slowly.

- Culture clashes and bad vibes between teams.

pragma_x• 3 months ago

Imagine being able to list your eBay items locally without having to have people needing to come to your house, or better yet, getting a cut of what you wanted up front since they're basically a pawn shop, and then they list it on eBay and turn a bit of a profit with a local pickup option available.

I kind of assumed there were already local businesses that already did this? Seems like a decent side-line for any drop-shippers out there. In any event, moving that activity into a local strip-mall would be super convenient for everyone.

CSMastermind• 3 months ago

There used to be back during the original eBay boom but I haven't seen any in a while.

greggsy• 3 months ago

EBay also has some very accurate data about market pricing for second hand goods and what categories are at greater risk of being returned, which reduces the risk of holding riskier items.

EDIT: regarding the CEO, you should find the interview where he’s challenged about funding.

topspin• 3 months ago

The interview is here: https://youtu.be/Bmj2PaxX24E

Instant classic.

PierceJoy• 3 months ago

I think this is the opinion of someone who thinks about personal security (like many on this site) and would prefer not to use Facebook marketplace. From observing many of those around me, this is an uncommon concern. Facebook marketplace is insanely dominant, and nobody cares about inviting people to their house. They would rather invite someone to their house than have to drive to GameStop and drop off their stuff in exchange for losing money on gas, losing time, and losing a cut of the sale price.

jamesfinlayson3• 3 months ago

I've never used it myself but I've helped out a family members with Marketplace sales before - go and be their nominal "back-up" when they meet the buyer in a local car-park.

PearlRiver2• 3 months ago

Yep this is exactly it. So many people with their childhood nostalgia not understanding that GameStop are and always have been a pawnshop.

Deadbeat dad selling their kids videogames to buy meth.

The pawnshop industry is incredibly depressing but it has been around for millennia and they will always be around.

wnevets• 3 months ago

They're gonna have to sell ALOT of their NFT power packs

Iolaum• 3 months ago

Many people noticed the math doesn't add up, e.g. in the CEO's interview here [0]. Am wondering if they are betting on the stock going up because of the news so they would then be able to fund the deal.

[0] https://www.businessinsider.com/gamestop-ceos-awkward-interv...

ball_of_lint10• 3 months ago

I think Ryan handled that badly because he didn't believe the question was serious.

They're offering 50% cash and 50% stock. At an eBay valuation of 56B: 20B of cash will come from their creditor, TD Bank. 8B will come from GameStop itself. 28B will come in the form of stock from the resulting entity, which will own eBay and presumably have a valuation north of 56B.

The resulting entity may end up having 50% or more of it's equity allocated to the existing eBay shareholders. This is normal for a M&A where a smaller company buys a larger one.

fragmede2• 3 months ago

"Normal" for M&A, and if you drink enough finance kool-aid it even makes sense, but then you step back, and go wait, no it doesn't!

JohnFen• 3 months ago

Gamestop is one of the companies that I refuse to do business with. eBay is a company that I am reluctant about, but use anyway.

If this goes through, that will be the final straw that gets me to stop using eBay entirely. That would probably be for the best.

ahaferburg• 3 months ago

There is no valuable information in that comment.

nazgulsenpai• 3 months ago

Why do you refuse to do business with GameStop?

ferfumarma2• 3 months ago

How come?

rbtprograms• 3 months ago

its a fun place to buy games though

octaane• 3 months ago

Long-time ebay seller here. I'm seeing comments floating towards the top that are essentially positing that the physical GameStop locations can be used as hubs where people can buy or sell their stuff in general (especially items that are 'pick-up only'). A pawn shop, basically.

Thing is, GameStop is, well, for videogames and videogame paraphernalia. It's not a general store. Doing this would turn them into a thrift shop, not a pawn shop, as people are trying to offload their carpets, desks, etc - bulky stuff.

I don't think this makes sense.

This does make sense when you consider the collectable market, another domain I'm involved in. Trading card games, specifically pokemon, have exploded over the last 5 years. GameStop is making a killing off of buying, selling, and grading these cards. Ebay is the primary marketplace to buy and sell those cards. There's also tax free havens ("Vaults") offered by multiple companies, grading service passthroughs, and scalping offered through ebay too.

Viewed through the above lens, that's what's prompting this offer, I think.

testudovictoria• 3 months ago

I think a lot of people are missing that eBay bought TCG Player back in 2022. This would fold the TCG Player brand into GameStop. Many (most?) local game stores list their inventory on TCG Player. In addition to the physical stores themselves, GameStop would have their hand in nearly every digital trading card transaction. GameStop would own the TGC Player warehouses and inventory.

wocram• 3 months ago

Tcgplayer is mostly a marketplace, I don't think physical presence does anything for them.

dgellow8• 3 months ago

Numbers I see for GameStop collectibles revenue

FY2024: $718 million

FY2025: $1.06 billion

randusername• 3 months ago

Man the business school case-studies must be getting stranger and stranger by the day. What's the headline for this one?

elzbardico3• 3 months ago

How the fuck such a thing could happen in a sane world?

turtlesdown1114• 3 months ago

Anyone can offer to buy a business, I'm sending in a competing offer based on my internal valuation of my Schrute Buck holdings.

mobeigi• 3 months ago

This was not on my bingo card. Not sure why eBay would take this personally. They've had a solid couple of years and there is room to grow. Gamestop on the other hand I'm not sure will exist in 10 years.

iwontberude2• 3 months ago

Please someone block this, they are going to ruin eBay.

protocolture2• 3 months ago

ebay cant get too much worse.

post-it• 3 months ago

Everyone is taking this too far at face value. The purpose of this announcement is to pump GME stock.

IAmGraydon• 3 months ago

Well it doesn't seem to be working.

toomanyrichies• 3 months ago

https://archive.ph/CeCxv

throwaway5752• 3 months ago

The sad thing is it could succeed. This is exactly how Putin put the apparatuses of Russia into the hands of his allies. I'm sure GME will get administration support, any white knights will get Netflix treatment from the FTC. Cohen, as a loyal MAGA supporter, would then use Ebay cash to support Trump aligned groups.

kjs32• 3 months ago

If it means eBay stops front-loading every search I make with car parts in thier latest market 'pivot' I'm for it. They can dispense with shoving the tacky 'live auction' stuff and constant 'are you sure you don't want to sell something', even better.

TheMagicHorsey• 3 months ago

Is it just me being ignorant and crazy, or does it make more sense for EBay to take over Gamestop, rather than vice versa?

bronlund• 3 months ago

I learned to programmed BASIC on paper long before I owned a computer. I knew I was going to get one though.

AdmiralAsshat• 3 months ago

CNBC Interview with Ryan Cohen:

https://www.youtube.com/watch?v=Bmj2PaxX24E

elAhmo• 3 months ago

This was so hard to watch. "Half stock, half cash" is such an insane shallow level of detail provided for a 55.5 billion takeover.

pesus• 3 months ago

I see praise on Reddit (by GME stockholders, of course) saying that this makes him appear like some tough rebel standing up against the evil mainstream media... but I'm really not seeing it. To me it seems like a very tired (inebriated?) guy in a leather jacket who can't comprehend or answer a very basic question. Is this what passes for being a good CEO these days? I'd expect them to be able to at least come up with a vague response instead of claiming they can't comprehend that one number is bigger than the other.

TrackerFF2• 3 months ago

The company (stock) subs are always echo chambers of the worst kind, bordering straight up cults.

Bed Bath & Beyond (BBBY) being one of the worst / most hilarious ones.

not_a_bot_4sho• 3 months ago

I don't know what I was expecting but I didn't walk away from that with any confidence in Ryan's abilities.

cwoolfe• 3 months ago

I've been with eBay since 2006 and have been consistently disappointed with their consistent failure to innovate. They need some inspired leadership.

maerF0x0• 3 months ago

As someone who's primarily used ebay to buy old NES et al cartridges, this makes sense to me. (No comment on the price being offered though)

itomato2• 3 months ago

Your move, Jamie

vladmk2• 3 months ago

If they can do it, then I can do it. Why not? Making the same bid with made up money

SV_BubbleTime3• 3 months ago

Do you have 9 billion in cash? Or are you as clueless as others about Gamestop from 2022 on?

vladmk2• 2 months ago

Definitely clueless - I’m not a genius like you who takes jokes seriously

yalogin• 3 months ago

Not sure where the synergy is except that both sell used stuff. For their market shipping speed doesn’t matter and so their large store foot print is not useful either. This is just a play to become more meaningful and to have actual revenue.

nektro• 3 months ago

when i saw this headline i expected it to be the other way around

kortilla• 3 months ago

“Half cash, half stock.”

sakopov2• 3 months ago

GameStop CEO was on CNBC and acted like a total dick the entire time after they asked him how financing would work for this deal [1]. It appears that he's upset that Squawk Box previously stated that GameStop is a bankrupt meme stock. This is probably one of the funniest CNBC interviews I've seen.

[1] https://youtu.be/Bmj2PaxX24E

SigmundA• 3 months ago

I mean its on the website...

potsandpans2• 3 months ago

I have to imagine that this performance was intentional and this guy is not just out of his mind.

Just find it difficult to imagine anything outside of market manipulation: either an eBay pump and dump scheme, or collusion to get investors to sell as the inflation comes down so activists can pick up more.

Forgeties7914• 3 months ago

I did some digging today and learned that he currently takes no salary and stands to make an unbelievable amount of money if he hits certain (pretty unreasonable apparently) benchmarks. I think it was $35billion. My very armchair guess here is that he’s just trying something incredibly loud, brazen, and ambitious because at this point what else can you do? They’ve been falling apart for years, the business has not turned around at all even after the wildly inflated shares they sold to get some liquidity.

He’s already rich and GameStop is falling apart, so really what’s the risk to him if it all goes under? May as well try a moonshot and move on. It’s not like anyone will hold him accountable for failing to turn around a ship that was already deemed sinking many years ago.

sakopov2• 3 months ago

Not trying to get into conspiracies, but about a month ago Michael Burry revealed that he opened a position in $GME which seemed very strange. Now with the news of a potential eBay acquisition I wonder if he's in on this pump and dump scheme if that's what it is.

hn_throwaway_99• 3 months ago

r/wallstreetbets has been having an absolute field day with this interview, gotta admit it's pretty hilarious.

I guess wallstreetbets can giveth (given they're probably the primary reason Gamestock even still exists as an independent company today) and taketh away.

tcp_handshaker• 3 months ago

"He doesn't understand your question, CNBC" - https://www.reddit.com/r/wallstreetbets/comments/1t3m56f/he_...

kadomony• 3 months ago

Shocked that they didn't just offer eBay $2 like they did for literally everything I brought to trade in.

whatever1• 3 months ago

Do they have the cash to buy them ? If not, why should we provide the limited liquidity that our banks have to finance this?

This logic should apply to all corporate acquisitions. You want to buy another company? Use your own cash and equity. No need for us to be exposed to your risk.

This will also reduce the predatory private equity takeovers.

nateburke• 3 months ago

Is this LBO a ridiculous enough of a proposition that you are going to email your senator and or representatives to complain about LBO loopholes in corporate finance law?

I didn't think so.

I wish them well!

blobbers2• 3 months ago

Anyone who is interested in how this sort of thing could work, or interested in how it has worked, could read the book "Barbarians at the Gate".

(https://en.wikipedia.org/wiki/Barbarians_at_the_Gate)

This sort of acquisition is typically called an LBO or Leveraged Buy Out. The story gets into the details of key figures involved, including Henry Kravis who people today would better know for his private equity firm KKR.

Basic formula is raise cash using junk bonds, buy company, fix up company or kill off costs, use money company earns to pay debt, sell company. Since you have leveraged, your payout can be large.

It's a similar style financing activity to a house flipper. example: buy house for 1M, but pay $200K + 800K debt (mortgage). Fix up house, sell for $1.2M. Pay off $800K debt. You're left with $400K, or 100% return!

dgellow8• 3 months ago

Minus fixing + selling costs

blobbers2• 3 months ago

Yep! Always helps when you have sweat equity or some clever idea.

LBOs can have other formats. Take Debt, assign debt to part of the company, auction off arms, legs, kidneys of company to pay off debt... you're left with a shell of your former company but a boatload of cash to pay off the debt and everyone gets their bonuses.

Unfortunately a lot of LBOs tend to result in job cuts. The Twitter deal was a bit of that sort of thing, and we all see where that went.

rayiner• 3 months ago

…how does GameStop have $55 billion?

morpheos137• 3 months ago

Seems like a sign of the apocalypse.

jollymonATX• 3 months ago

This will be the end of ebay most likely if it goes through. Not right off the bat, but eventually. Just a hunch.

GameStop makes $55.5B takeover offer for eBay

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