Matt C
Cybersecurity Engineer, Bitcoin Background Since 2014
GameStop's eBay acquisition, paid half in cash and half in stock, means dilution to oblivion for shareholders. Per @ReesePolitics, Ryan Cohen's CNBC Squawk Box interview on the deal turned into a heated exchange in which Andrew Ross Sorkin was in disbelief at his repetitive answers, and his line that the details are on the website draws ridicule. x.com
GameStop shareholders are likely to be diluted to fill a funding gap of more than $10B. Its CEO implied as much in an interview without saying it outright, which is most likely why the stock reversed course. 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
GameStop's Ryan Cohen is making one of the most aggressive streaks of insider purchases relative to market cap over such a short period. He bought another 700,000 shares at an average $24.41, about $17.1M, per an SEC Form 4 reported by @ReesePolitics, a show of conviction that ignores rising yields. 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 is not worth buying: it has no product, its management and reputation are poor, and it is constantly diluting shareholders. x.com x.com
GameStop's proposal to acquire eBay matters most because it would put Ryan Cohen in charge of the combined company, which should create more shareholder value than anything else. Cohen founded Chewy, now a $10B company, saved GameStop from its demise and built a fortified balance sheet. Dismissing the proposal is a rookie mistake. x.com x.com
GameStop has not created value where it matters to shareholders: the share price has been a dog for five years. Much of that came from heavy dilution and from alienating the investor base that drove the stock to parabolic heights. The idea that Ryan Cohen creates shareholder value is revisionist history, whatever the balance-sheet gains. x.com
GameStop's proposed eBay deal does not hold up financially. Servicing the debt would cost over $1.5 billion a year, while the two businesses combined produce less than $2 billion in free cash flow, inflated by Pokemon mania. No real bank would underwrite it unless as a bridge to further massive dilution. Ryan Cohen's compensation plan is centered on market cap thresholds. x.com
GameStop's case rests on CEO Ryan Cohen's continued insider buying, nearly $70 million this year, supporting a $30 target. The stock is up almost 20% year to date, on par with the Nasdaq 100. 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
