Dan Loewenherz
Building at Opendoor, Former CTO at Coffee Meets Bagel
GameStop's offer for eBay makes zero sense, and the whole episode was a clown show. eBay is a consistent money-making machine without any real competition, so if GameStop wants it, GameStop needs to prove it can afford it. @JesseTinsley framed eBay's board rejection of the offer as "neither credible nor attractive" as dodging accountability for overstaffing; whether eBay is overstaffed is irrelevant to the deal. x.comÂ
GameStop's eBay bid was a botched strategy from the start, and Bloomberg's report that it is considering withdrawing the bid in favor of a partnership or joint venture reinforces that view. x.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
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.comÂ
GameStop should be falling, not rising, on its bid for eBay, because a potential acquirer's shares should trade down on such a deal. eBay itself may also have just been hit by something Claude came up with. x.comÂ
