GameStop makes $55.5B takeover offer for eBay

Operating income was $232.1 million, not $285.9 million.

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

That total revenue also declined 5% YoY

no, they issued more stock. stock is a claim on corporate equity, ie the delta between assets and liabilities. existing stock holders' claim to equity gets diluted when this happens, but share prices will often not be effected proportionally, making it appear the company has "made a billion dollars" when in fact they've just split the same pie into smaller pieces and managed to sell it at the same price. ryan now seems to think he can issue shares to acquire ebay, which will be much harder than fleecing retail.

You're conflating two things here.

Yes, in 2021 GameStop did sell shares to raise cash in a dilutive way. [1]

No, that is not being treated as profit or revenue.

Gamestop had ~418 million in profit in 2025. [2] A fraction of that profit does come from interest income. Ignoring that (say to value the business separate from the cash) they still made ~110 million in profit.

In my personal opinion (not financial advice) Gamestop with the cash it has today is a much more attractive investment than without. If you have worries about an economic downturn, it's a hedge. If you worry about GameStop being able to maintain it's current revenue/profit or volatility, it's runway. There's a variety of ways it reduces the risk of an investment.

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

[2] https://www.sec.gov/Archives/edgar/data/1326380/000132638026... page 27 has the consolidated results.

Worth also pointing out though that if you can sell new shares above intrinsic value that is accretive to existing shareholders. Dilution isn’t always a bad word. (It’s bad for the people buying new shares.)

Ebay commissions are not that high, 13.25% for most items.

The barrier to listing huge amounts of merchandise is not the commission, but rather the amount of labor it takes to list and price everything and pack and ship it and deal with refunds and returns for items that turn out to have problems. And how a lot of items are only economical to sell locally, because when you add in shipping costs it approaches the value of buying something new.

Buying eBay doesn't provide any kind of easy way to help offload inventory at all. The way inventory is offloaded in bulk is in bulk pallets sold at auction, where people bid on them and then do all of the grunt work involved in photographing and listing and packing and shipping. Which is a significant proportion of sales on eBay today. GameStop can easily auction off pallets of their merchandise if they want, today. In fact, there's a good chance they already do.

Neat - Setting up a eBay account for your company doesn’t cost $55B. I’m available as a part time CFO from now on

Why does it give structural advantage to own a bunch of dead mall and strip mall brick and mortar stores that have been on the verge of bankruptcy for well over a decade?

It's hard to get lower friction (register a new account) and lower fee (0%) than Craigslist.

People trying to sell their used junk aren't going to accept a 30-40% cut. It's why they aren't using eBay these days in the first place.

I interviewed at a place that had their own collectible card market, I think they partnered with eBay. But the whole service was that you would yield your valuable cards over to them and they would store them in a repurposed bank vault for safe keeping or to act as a seller. Cards that were like $1k or more.

They seemed to be doing really well esp with all the pokemon and MTG card crazes going on.

eBay has also started doing strongarm middleman things as well.

If you list an item, it strongly "suggests" a price. Sounds innocuous, right? However, when every seller knows they would be stupid to list a product for less than the suggested price, that means that eBay is enacting a collusion process on their sellers to regulate prices for products sold on their platform.

I don't think this is illegal in any way, but it is bad for the buyers as it decreases the chance that they will get lucky with a purchase and ensures that all purchasers on the platform spend as much as they can afford to spend.

Next, as a seller, eBay presents you with an option to "promote" your product, for a fairly significant percentage of eBay's suggested sell price. (Last time I tried to sell something, they wanted $9.99 to promote an item expected to sell for ~$150, for instance). If you do not "promote" your item, then it is thrown to the bottom of the listing and may be filtered out when purchasers sort by "price low to high" as they often do.

I chose not to promote my item as I was just getting rid of it, (brand new OEM toner for a printer that normally sells for $200) and it got almost no views and ended up selling for $40, of which ebay took $7.50 for their cut.

I checked the other solds for the same product and mine was the lowest sold by almost $100 all seemingly because I didn't pay the racketeer price upfront.

I didn't care about the money, I was just getting rid of it, and ebay punished me for not playing ball their way while also losing out on their profits just to make a point with me.

If you don't eBay the ebay way you will suffer for it.

Speaking of which, eBay has started changing the number of results based on your search filtering, preventing purchasers from finding the specific thing they are looking for in exchange for something that is often more expensive and not quite right.

Try it yourself. Search for something very specific and then change your filters and see the number of available items increases and decreases based on how you search. I honestly would not be surprised if they were hiding the unpromoted less expensive more accurate item you are searching for from you in the expectation of inducing you to buy the more expensive item in the process.

Why would eBay do this? They make more money. It's pure enshittification. They charge the sellers to promote. They set the prices. They charge an insane percentage, something like 15-20% of the final sell price to the sellers, and they have made the platform hostile to its original purpose of being a bazaar for ordinary people to sell their old stuff to people that might want them.

Of course, they are still seller hostile, they protect fraudsters who buy expensive items and claim they are fakes or broken and return bricks, and they have strongarmed their customers into arbitration agreements in an attempt to prevent anyone from suing them to stop their anti-consumer practices.

> GameStop already has this network of pawn shops, and those stores are doing enough business to justify their existence

Gamestop closed 2,400 stores from 2020 to present, and operates just 2,200 stores currently. They'll continue to close stores as their revenue continues to shrink (down 60% in the last decade).

>used gaming inventory

physical used game inventory is a fraction of what it was a decade ago, and continues to shrink as a category, digital sales continue to climb and exclude Gamestop

There's one of these near me in a shopping center with terminally low rents. I think the additional value add for these places is that a) they can help you price the item to move and b) they can wade through eBay support if things go wrong.

I remember one of these shops all the way back in the late 2000s. At the time I was confused about whether it was operated by eBay or a third party. It did not last long.

> USPS created Media Mail

Umm, that’s been around since 1938, which is a few years before the era you’re talking about…

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

It didn't add enough value back then, but IMHO it does now. Selling on eBay is a massive hassle these days for a variety of reasons, and much less profitable for onesy-twosy transactions than it used to be.

If I could just drop off a bunch of stuff at my local GameStop and forget about it until the checks arrive in the mail... yeah, there's definitely a business model there.

It disgusts me how eBay sellers abuse the US Post Office by stealing supplies. It’s one way to guarantee I never buy from someone again.

Consignment doesn't offer the seller a very good monetary deal, though. They're essentially a junk hauler that might pay you a few bucks. We all have that pile of old computer components that we could probably sell piece by piece for $400 on eBay, $200 on Craigslist/FB Marketplace, $100 at a yard sale, and maybe if you're lucky a consignment place will give you a $40 for it all.

> Obviously they're going to need to liquidate a lot of this stuff.

If you read online employees have talked about how they donated it or threw it all out, presumably there is very little of that stuff left at this point (and probably nothing left of any real value).

Ex: https://www.reddit.com/r/GameStop/comments/1qceolz/what_did_...

Is there an alternative you might suggest?

> coming from a finance background, I didn't find the book in general to be particularly insightful

Because you already knew that stuff, or because it's wrong?

Hilton is a good example, right?

But vast majority of the time it’s bad?

> So what gives?

People just want someone to blame.

Just curious.

If there is iffy interest coverage for the debt and assets might be a stretch to cover (principal + interest), why will someone sponsor the debt here ?

Also, rates seems to be high, at least compared to recent history, to be favorable for this kind of LBO.

It's still an LBO, in effect borrowing against the target to get control of it.

OP is just saying that PE uses the same playbook, not that this move is "private equity".

Say you take out a mortgage, then rent the house to a series of meth dealers to extract the rent while devaluing the property, and then default: you're still personally on the hook for any post-foreclosure deficiency judgment. One issue with LBOs is that, after extracting cash and fees, PE funds have various ways to extinguish liabilities that individuals don't, both by shielding the PE fund from debts and the use of bankruptcy and restructuring of the acquired company to discharge liabilities, including those from litigation.

There are various proposals to deal with this, but the most effective are probably imposing joint and several liability on certain kinds of litigation (breaking the "investor veil" and allowing rights of action against PE funds for the actions of their portcos) and limiting business judgment rule protection for directors and senior managers who approve LBO sales that are reasonably foreseeable to end in bankruptcy, which creates personal liability for fiduciaries. In other words, align the financial and personal interests of the individuals and companies involved with those of the acquired entity.

It is a thorny question. The best way I can square the difference is that generally buying a house with debt is on the debtor and the house itself is collateral. The debtor can't pay back the loan the house is taken by the bank to be sold. Where as a PE leveraged by out the debtor is the target company. A company is different than real estate in that they are a legal entity that is now responsible to pay back a loan equal to their own value. The collateral is the business, but the business is now illiquid and has to sell of real assets and go bankrupt.

For example, Joanne's Fabrics was a profitable business with a fair amount of real estate. After PE bought them and was saddled with unreasonable debt they were in the red and had to sell all their stores. This removed useful and profitable business from the economy and sold off the assets in a fire sale. Where as me losing a house just means a bank now owns it and someone else can buy it. But if someone were to buy Joanne's they'd have to pay off the debt Joanne's owed for being bought and run into the ground

It would be functionally the same as what you described if the parent company took on the debt, but that’s not how they do it. They make the purchased entity take on the debt. Hence why you often see mass layoffs in the company that was acquired soon after the deed was done. The company has so much debt it can barely function and the easiest way to pay some back is redirecting salaries at it.

Then once you realize why private equity firms do this, how their leaders have extreme monetary incentives to squeeze value out of companies in ways not limited to this, you realize why it’s insane how we have basically zero regulation on it.

Home owns are owned by people, not the home itself. If someone fails to pay a loan, their own credit score will be impacted

For these PE loans, its the new company that takes on the debt, not the buyer. Essentially any broke person can "afford" any trillion dollar company this way

In a home loan, the borrower buys a house and pledges that house as collateral. The debt is the buyer’s obligation. The house does not have to “pay the mortgage” by laying off the kitchen, selling the roof, or cutting maintenance. The borrower uses outside income to service the debt.

In an LBO, a private equity buyer often buys a company using a large amount of debt, but the debt is typically placed on the acquired company’s balance sheet or serviced from that company’s cash flows. In effect, the target company helps pay for its own acquisition. That is the key difference.

In a lot of LBO schemas, the acquirer loads the target with, abusing leverage to maximize its returns, but this leaves the company with very little margin errors, any hiccup in the economy, and Kabum! The company goes under, an once viable company closes its doors, employees lose their jobs and local economies suffer. Meanwhile, the PE entity walks with as much cash as it could extract from the acquired company and debt-free.

Some PEs also go one step ahead, make the acquired company borrow more money, not to invest in the business, or restructure debt, but to pay a dividend to them.

In other cases, PE companies acquire a controlling block and then use it to make the company sell their assets to them, to be immediatelly leased back to the company. Then, there is also the practice of extracting all kins of "monitoring fees", "advisory fees", "consulting fees", etc. for services that are vague and frequently of questionable value.

PE companies also frequently engage in overly agressive cost-cutting to manipulate the EBITDA in the short run to sell the company at a appreaciated valuation, but hurting the long term value creation potential of the company and the quality of their services.

For PE, sometimes even bankruptcy is a business strategy.

My kneejerk is that most consumers these days expect delivery for items purchased online, and allowing them to pick up their items at a brick and mortar probably isn't the issue.

Now, dropping off items you're selling? That probably removes a decent hurdle for many first-time/one-time users who aren't familiar with shipping (what box/label/insurance/padding/...).

>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.

I think the advantage is going to be "bring your junk to GameStop and an employee will put it up for sale and handle shipping"

You'd get considerably more trust buying something on ebay that at least some teenager looked at and verified was real and powered on, etc.

"Attempting" is not in any way a valid description of what he's doing there. That was a wild clip.

Basically a merger.

Except a sudden dilution usually tanks the stock by the exact % its diluting

So GME dilutes by 20%, stock price immediately goes down by 20%. its not some infinite money hack

If his choice is between not getting paid due to not meeting targets, and getting paid in diluted stock, then it’s straightforward enough.

If he gets awarded a huge number of shares for hitting market cap goals, existing shareholders are diluted to his benefit.

How is the framing wrong?

>He obviously has faith that, long term, the value of the combined company can substantially grow.

Depends how much of them he has before and he will after, it might still be worth diluting if difference is vast.

Also, why long term if short term could also do?

So you mean...marrying someone but transfer all the personal debt to the others, then divorcing so that I have no responsibility whatsoever? Not even an obligation to settle for the debt just like disappeared through an expired relationship?

I believe this is what they call the 'Texas Two-Step'

Perplexity wants to buy Google Chrome vibes.

He can argue that. But to me it seems more likely that culture and market demands are so different between the two companies that sharing any substantial resources would be to the detriment of at least one of the two halves. And more likely detrimental to both

The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business

>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.

GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities.

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

Sigh. The synergy argument, once again.

While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different.

That is a massive “if”

Which is a laughable argument.

It that's bad for GameStock shareholders, surely they'll vote against it?

It depends. If Gamestop is able to find the efficiencies that the CEO is claiming, EPS jumps between 50 and 100 percent. Gamestop shareholders get diluted down to owning a smaller piece of a much bigger earnings pie. That's if you don't engage in any conspiracy theories about how many shares retail traders really own (don't go down that rabbit hole).

Suffice it to say, the Gamestop's price floor has gone up each time it's been diluted in the past few years. Perhaps lower highs, but higher lows. And a company that can afford to try a stunt like this.

The 2023 mini banking crisis has its own wiki page and it's quite informative. Of the three banks involved, one bank saw its shares drop 97%, another "shareholders lost all invested funds" and the third got auctioned off for pennies on the dollar. No investors were bailed out.

Banks go bankrupt all the time. Community Bank and Trust of West Georgia went bankrupt just 3 days ago. The Metropolitan Capital Bank & Trust that went bankrupt back in January. 99% of the time the investors are completely wiped out. Bailouts almost never happen, which is precisely why it's such big news when it happens.

Ah-hem SVB?

For the most part, the lenders are not the people receiving management fees.

Of course lenders will lend more against more collateral. That doesn't mean it always ends happily.

This is a fundamental misunderstanding of the US employment model. Businesses can do all sorts of dumb things that end up making them unable to continue to invest in employees. The check against that is the greedy owners.

Regulations designed to ensure businesses never take risky bets lest they have to lay people off would be a nightmare of unintended consequences and surely in aggregate hurt employment.

Could be. But he has to secure board approval for doing something like this. So he apparently was able to convince the GameStop bod that this is a reasonable play.

One has to wonder if there's an unstated interested party ready to back the deal.

Once. Followed by a tank in price and descent into chaos.

They own eBay + GME + some financial alchemy. If you aren't a financial wizard you should assume that the value of the financial alchemy is negative. (Because 99% of the time it is.) Now, what are the synergies of eBay + GME that outweighs the chaos caused by the merger and the finance stuff?

I’m not totally sure how it would be structured but if GME is the purchaser then the merged company would be listed under GME and eBay would become a brand in the GME group and no longer a stock listed under the eBay ticker.

The whole thing seems incredibly dubious and fishy. The eBay board should vote this down which is why the CEO of GME has already realised that and said he’ll appeal to the shareholders directly. If eBay wanted to load themselves with twenty billion dollars of unnecessary debt and extra complications which would kill the company then they could do it themselves. They’re not in that kind of business.

This is not atypical; smaller company “buys” the larger company with debt on the larger company’s books. The blended shareholder mix is mostly the larger company; management comes from the smaller company.

The one I was most familiar with was the Discovery “acquisition” of Warner Brothers. Though apparently that’s a little complicated because AT&T was divesting itself of Warner.

No, it's not a leveraged buyout

Because it acquires an asset worth roughly that much, it’s neutral. GME is (probably!) not doing a huge at-the-market offering, they’re creating the shares and immediately giving them to eBay shareholders.

In practice the price paid for the company being acquired is usually a bit higher than the market value (so the shareholders take the deal), and the market usually punishes the acquirer a bit and the resulting entity’s stock will fall a bit. (This is most definitely not investing advice.)

the stock they'd be issuing would be for (GameSpot + eBay) whereas the current stock is for GameSpot alone

via a cunning pump on Wall Street Bets

… and the stock has not dropped 39%, in fact it’s trading about where it was a year ago. Shareholders have been content to let Cohen add to the balance sheet, adjust operations and make a large move. This is one such move. And GME is up 5+% in pre trading, so shareholders are generally positive about this idea.

If bagholders were capable of buying low and selling high, they wouldn't be bagholders.

you think all the bagholders are in at the current price?

“Implicitly implied” is redundant. Either of these phrasings would suffice:

> It is implicit in many comments.

> It is implied in many comments.

Links?

Interesting how none of these are around anymore

Also when Capital Cities purchased ABC. A popular phrase coined by the media was "minnow swallows whale"

https://www.nytimes.com/2022/05/25/business/media/thomas-s-m...

And much more recently: Paramount Skydance / Warner Brothers.

You’re omitting the fact that they’ve had declining revenue YoY 4 years now, with no sign this won’t be year 5. Their liquidity is primarily the result of leveraged debt and sold off shares. They have had to seriously downsize, including shuttering tons of brick and mortars.

You’re picking one single metric that’s not even consistent for 2 years to assess the health of the company. It feels rather cherry-picked. The whole story is very rough for them right now, they’re in trouble.

Why would it not be legal? You can take out any loan, so long as the creditor believes in your ability to pay it back with interest, which informs how it gets priced. This is basically Finance 201 and everyone is up in arms ITT

Well, how much more value? It seems like an awful lot of work to make thousands, if not millions, of shareholders very angry with you, if he's just adding cents-per-dollar to his net worth.

I'm not saying that that isn't his aim, and I've definitely considered that a Vader Imposition is in play. But it seems like there are easier ways to make that kind of money without becoming Public Enemy #1, smack-dab in the middle of the "eat the rich" zeitgeist.

Does it make more sense to you phrased as "GameStop offers to purchase controlling 50% of eBay for $28B" ?

Keep in mind, this is not because they turned the business around and made tons of money. Sales are lower now than in 2020.

Investors gave them this money; they sold additional stock to raise $3.47B in 2024, and another $4.2B of convertible debt in 2025.

Including a few thousand bitcoin [$]

---- henlow, fellow regards ----

Any questions for muh'smoothest'brain?

[$]: 4710BTC, to be exact

Who would down vote this? It’s true.

Can people here really not keep their emotions in check enough to admit clearly obvious facts?