Scott R. Grossman
Founder of Vindico Capital, Consumer-Sector Investor
eBay looks overpriced at $116.50 against GameStop's takeover math, making a short cheap convexity. GameStop's original $125 offer, half cash and half stock, now implies about $116-117 after GameStop's roughly 15% drop, while a rational 10% arb spread would need a $129-130 bid. Funding that with GameStop stock needs about 20% more or heavy leverage. eBay is not a pretty asset and hardly the tip of the spear in new commerce; a higher bidder is the risk. x.com x.com
GameStop shareholders face about 70% dilution to fund CEO Ryan Cohen's $56 billion offer to buy eBay, with no short squeeze coming. A year ago Cohen was hyping Bitcoin purchases, which raises doubts about whether he knows what he is doing. After that interview, a GameStop shareholder should sell every last share. x.com x.com x.com x.com
GameStop lacks the money for its eBay bid, and Ryan Cohen's interview suggests he is using retail investors as exit liquidity. The proposal offers $125 per eBay share, half cash and half GameStop stock, valuing eBay equity at $55.5 billion, with a TD Securities letter for up to $20 billion of financing. The interview sent GameStop shares lower. x.com
eBay is getting new life from a possible takeover bid by GameStop's Ryan Cohen, who already owns 7% of the float. It has strong free cash flow, four years of rising revenue, accelerating EPS since late 2023 and growth every quarter since September 2021. MarketSurge notes a bullish base breakout, and the target is $125. x.com x.com
GameStop's $56 billion, $125-a-share bid for eBay could unlock over $100 billion of value by turning eBay from a stagnant auction site into a true Amazon rival under Ryan Cohen. Synergies span collectibles, trading cards, live commerce and store pickups, plus cost cuts and AI upgrades. Cohen's track record stands out, and the absence of any Wall Street buy rating on GameStop is a strong contrarian buy signal. x.com
GameStop's eBay bid looks unlikely to get funded, because Ryan Cohen only gets the $20 billion of financing if the deal stays investment grade, which is not likely. Per @Stonkfather2021, buying 51% of eBay would take about $28.4 billion, covered by GameStop's $9.5 billion+ and TD Securities' $20 billion. x.com
Avoiding GameStop's unsolicited proposal and Ryan Cohen's weak execution leaves eBay better placed. eBay is easily worth over $100B today and should be worth much more in five years without GameStop and Cohen; Cohen is not the one to beat Amazon. x.com
A GameStop bid for eBay looks unworkable, so both stocks should fade. GameStop would need to issue about 1 billion shares, wipe out its treasury and take on heavy debt, making Elon Musk's Twitter deal look easy. The deal probably never happens, and if a real offer is made, GameStop has no chance of trading up. x.com
GameStop is a short because its CEO plans to raise tens of billions of dollars to complete the $56B eBay offer, massively diluting shareholders. The narrative has flipped from the little guy squeezing hedge funds to insiders using retail as exit liquidity to hit comp packages. $5 is a fitting target, though the market cap may well hold up. x.com x.com x.com x.com x.com
eBay is a business worth owning long term for its aggressive buybacks and its role as the go-to marketplace for used and hard-to-find items, with collectibles basically locked up. A pullback would offer a better long-term entry. A rumored GameStop bid for the roughly $50B company remains doubtful, as it would need serious financing. x.com
GameStop looks like a reasonable bet despite misgivings about CEO Ryan Cohen, because it holds a ton of cash and is not buying eBay. x.com
