Broken Moats
Family-Office Long/Short Research, Variant Perception
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 rumored offer for eBay cannot be financed in any credible or accretive way, so the stock's double-digit jump makes no sense. eBay's enterprise value is over 3x GameStop's before any buyout premium, private credit will not touch it, and eBay holders would not accept GameStop stock at near-historic dilution. Any deal would leave eBay weaker and saddled with a CEO who appears to be pumping the stock for his own benefit. x.com x.com
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'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 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
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
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 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 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 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
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
