GameStop makes $55.5B takeover offer for eBay (opens in new tab)

Key financial results for Gamestop from the recent fiscal year (2025–2026) include:

    Net Income: $418.4 million
    Gross Profit: $1.196 billion
    Total Revenue: $3.63 billion
    Operating Income: $285.9 million

You can't normally describe it as profit because stocks by rule trade at a fair price, but it's surely reasonable to consider in this case GME making a profit from the squeeze given they were selling a good well above fair acquisition price.

The TLDR for people who don't intuitively understand why: existing shareholders are diluting their stake in the company by issuing new shares and getting money for those new shares. It's simply selling part of the company. Not profit.

You're right that there's no real advantage to eBay buying a pawnshop conglomerate, but a pawnshop conglomerate buying eBay gets a massive advantage. They're already sitting on a mountain of used inventory, and at some point a lot of it will be thrown away because there are no local buyers for it. Having a commission-free way to offload that inventory would be huge for them.

But the brick and mortar distribution is hard to build and gives a structural advantage. As another poster pointed out, you could sell your items locally and not need to deal with shipping, communication with buyers and other stuff. It would reduce friction which might actually expand the marketplace significantly. I personally have multiple family members that throw stuff away because listing on eBay is too hard and pawnshops too sketchy

There's friction though, if the process is under one roof end-to-end, ebay can take 30-40% (15-20% today) of every transaction by just letting you dump your old stuff. Might even eat FB marketplace and CL.

Over time, eBay has become the middleman - with international shipping centres, basically escrow service with buyer protection, and rather high fees for promotion and of course, the actual sale. No middleman is something like Craigslist or FB Marketplace.

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. USPS created Media Mail and flat rate boxes, and UPS stores are found in nearly every community. They handle the hard part (shipping) well enough.

The only thing I can think of is Gamestop positioning to become a clearing house for fan swag or gaming items the way Woot is for Amazon overstock.

I think the difference is that GameStop already has this network of pawn shops, and those stores are doing enough business to justify their existence (at least somewhat; GameStop wasn't doing great before all the craziness). I could see something like the UPS kiosk in my local Walmart working; if you offered eBay returns at GameStop stores, you would be adding revenue without needing to justify an entire store to it like eBay would have needed to.

There's also the synergy that GameStop now has access to more used gaming inventory, a category that I'm led to believe is high margin for the stores.

After I wrote my comment I thought about that haha

Just bought a used switch there yesterday, 2 guys are selling or trading some kind of game card, kid and his dad getting a PS4... Like you say, no one goes to game stop anymore, it's too crowded ;)

This is called consignment and is an industry unto itself, usually for antiques since you need a lot of space. You give them your goods and they sell them. You get a cut if they actually sell.

I'm surprised nobody has really mentioned this in the thread. Does anybody remember the "trade in anything" day GameStop just had? https://www.usatoday.com/story/money/2025/12/08/gamestop-tra...

Obviously they're going to need to liquidate a lot of this stuff. It can be quite lucrative if done right. You're basically getting inventory for free.

The interview is here: https://youtu.be/Bmj2PaxX24E

Instant classic.

There used to be back during the original eBay boom but I haven't seen any in a while.

Eh. The capital was provided by various share offerings and, most recently, a bond sale, which retail probably and definitely did not buy, respectively.

But here's the fun part. All of those issuances were made during periods of weirdly high prices. The biggest one was this time 2 years ago. The price jumped to $80. Doesn't seem like much, but there was a share split in 2022, 4:1. Between that and the offerings, buying the same proportion of Gamestop The Company as one share did in late January 2021 would have cost about... $350? The intraday high from 2021? Weird. Oh, but it happened in after-hours. When non-institutional traders usually aren't active...

I don't think anyone truly knows exactly what's going on with Gamestop's stock price.

Because Etsy is not a general second-hand marketplace. Its niche is artisans making small batch items. And making your own thing at the scale of ebay is not exactly a small feat.

What? Most (all?) platforms let you opt out of this, and you receive payment when your shares are borrowed. And shares are fungible, how would it matter if one share is borrowed by 10 people or by none?

> Maybe eBay survives as an international site

I don't really know what alternative there is to eBay as an 'everything shop'. I can get specific screws there, or diff fluid, or a customised motorhome name sticker, or an old baseball cap for an airshow I attended in 2008.

And if I bought the wrong diff fluid I can sell it.

The main value over Amazon, though, is that the search works.

> Can you imagine if the mortgage was owned by our home, not ourselves. And we could stop paying it without any personal consequences

To a large degree you can just stop paying your mortgage.

The biggest personal consequence is you will be evicted and lose both your place to live and any equity you built up.

The other main consequence is it will show up on your credit report for 7 years. Maybe some specific forms ask "have you ever been foreclosed on" in the future.

As a side effect of bailing out banks they have a lower risk profile than entities that don’t get bailouts. It’s essentially an additional subsidy on top of the already generous ‘money creation’ they’re allowed to do. It’s impossible to compete against this. The riskier the bets the stronger the subsidy so of course they’ll crank risk up to 11. Since the fate of banks and pensions are tied you can’t punish the banks without also punishing pensioners and pensioners are a strong voting block. It’s a distorted economic system that can only either crash or become more distorted. Since becoming more distorted enriches the already wealthy then that’s the only option that will be taken. The only thing that can stop it is to run out of resources to spend trying to save it. Importing a large number of foreigners is a rather creative (desperate) solution. I don’t know how long this will last but I’m confident I will see a major economic calamity in my lifetime.

I mean I don't love eBay, but it's certainly not dying, where did you get that idea? Its revenue has continued to grow every year post-COVID, and competitors all face the central challenge of eBay's network effect.

It's not experience massive growth but that's because it's a pretty mature market by this point. People who want to sell their stuff already use eBay. It works. It's mature.

Once you own the company you take out loans to pay a onetime dividend to you to pay off your purchase loans. Same thing perfectly legal

Leveraged buyouts are a fucking disease

Who should take out the loan if not the new company? The old company? What would be the difference?

I've never used it myself but I've helped out a family members with Marketplace sales before - go and be their nominal "back-up" when they meet the buyer in a local car-park.

People want to believe a 'cool' story, not that they got duped.

I watched that interview live this AM and was so confused. The CEO looked annoyed and pissed the entire interview. Kept answering questions with “it’s on our website [awkward silence]”

It almost seemed like he was incredibly hung over and didn’t sleep last night.

But I got the feeling he was being a jerk on purpose. Still don’t understand why though.

I read that book, and my recommendation is to skip the third act, which is painfully repetitive.

In fact, coming from a finance background, I didn't find the book in general to be particularly insightful, and much more ragebait / policy oriented (which makes sense given the author was a DOJ Antitrust prosecutor)

It's absolutely an LBO. The leverage is maximizing debt to equity. That debt is then transferred to the new entity.

It's how they destroy companies while making billions in private profit. They over leverage them. Accrue debts. Sell of equity. Wash, rinse, repeat until bankrupt.

This book got a unfortunate title. Private Equity can be a completely legitimate activity. What it needs is some regulation on some underhanded financial tatics it uses, such as LBO.

I was curious about this, so I searched for the most authoritative study on private equity. Here’s what I got: https://journals.aom.org/doi/10.5465/AMBPP.2021.14309abstrac...

This says that private equity effect on employment is neutral and efficiency is positive.

So what gives?

I've been through an LBO before, my first thought when I saw this news was: so eBay is going to have to pay interest on a $50B loan now?

eBay had $2B of net income in the last year. That might get them half-way to paying their annual interest payment if this deal closes. Get ready for the inevitable layoffs to cover that interest payment.

Is it still "private equity" if a public company takes a loan to buy another public company?

I mean, it is functionally the same as home loans? Would you be proposing a carve out that buying a house or car is ok this way, but nothing else?

On the bright side, if the plebs start making money through LBOs, they might finally find the will to regulate.

> They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment.

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.

How much does Staples charge for its Amazon return fulfillment where you don't even need to wrap up the item?

It is really popular: https://www.staples.ca/a/learn/amazon-returns-now-available-...

I question whether it is advantageous to use GameStop stores for this or just to piggy back on what Staples is already offering to Amazon and others for their returns? Fulfilling returns for Amazon isn't significantly different to shipping eBay orders.

A company doesn't need $55bn to buy a $55bn company. They can issue new GME shares and exchange $EBAY for $GME. These are sometimes called "stock-for-stock" transactions

GameStop has a standing approved agreement to issue up to a billion new shares. If you read the offer you will see it is 50% financed by GameStop stock.

They threw him a hardball today in his cnbc interview on this topic. $GME stock value would plummet short term, but the combined company would revalue much higher.

Current Gamestop shareholders would be diluted. They would own, proportionally, a much small slice of the combined company, but at a higher price point.

The framing of this as, "Ryan Cohen is diluting Gamestop shareholders in order to meet the terms of his enormous pay package" is disingenuous though, as his pay package is all stock. He's diluting himself too. He obviously has faith that, long term, the value of the combined company can substantially grow.

Here's the GME CEO attempting to explain the deal https://x.com/i/status/2051303211668021478.

And "Attempting" is doing the heavy lifting here.

There is precedent for this kind of trickery being played.

For example, Honeywell acquired Garrett AiResearch, a well known manufacturer of turbochargers for combustion engines, through a series of mergers.

Later on, it loaded them up with debt (over $1.5 billion, mostly asbestos related indemnity obligations from other parts of the business), before spinning them out as an independent entity again. Two years later, Garrett filed for bankruptcy claiming it was succumbing to the unsustainable debt burden placed upon it by its former owner.

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

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.

They are paying half in GameStock equity. They will issue new shares so they will buy Ebay of $55bn, but add only $20bn debt.

Its good for GameStock management who will end up running a much bigger business. https://investor.gamestop.com/news-releases/news-details/202...

Game Stock management is essentially claiming that they can run Ebay better than the current management so Ebay shareholders will end up better off by selling to Game Stock: they get some cash and shares in a business that will be mostly a better run Ebay. Very possible bad for GameStock shareholders who will end up with a smaller stake in a bigger business.

Depends on how market cap is defined for the purpose of the contract. Typical definition is just against floating shares in the market * share price. Debt doesn’t factor in at all except in so far as it will influence investor confidence -> share price.

That said: conceptually it’s not an awful fit for GameStop. In so far as video games discs and cartridges were the main disposable belonging i had as a kid and the main target for new purchases, Funcoland was (later to become GameStop), if you squint your eyes, a brick & mortar eBay scoped to only video games. If you’d been an SV startup at the time pitching the eBay concept you could have said “it’s like funcoland, but online and for anything and also lets people sell peer to peer “

In the modern world if you are a bank you will be bailed out eventually, thus your problem becoming everyone's problem.

The problem is that leveraged buyouts allow me to effectively inflict that debt on other companies, making a buyout offer the existing shareholders won't be able to resist and then reorienting its operations around servicing the debt I took out. In fact, lenders arguably favor this, letting me use the company I'm acquiring as collateral to acquire more debt at better terms than would otherwise be available.

The people who work at the bought-out company who will then be fired due to PE now gutting workforces to pay off the debt. Laborers are getting the shaft

The lenders get their money back via management fees. Pretty much only the consumers and the employees get screwed over

It's the problem of all the employees (and potentially customers) of the company being plundered.

They have no say in the matter, and given that the lender can probably absorb the loss without, you know, missing mortgage payments or losing health insurance, I would absolutely argue it's not just their problem.

You can certainly hold the opinion that "it's just business" but it feels like an unnecessary part of business that very often has real disruptive and detrimental effects on average working people, for the sole benefit of rich people getting richer.

And yes I get that it's not just a PE problem, but PE is a big one of these kinds of problems.

If it was just you personally, sure. But a bank failure affects lots more people than just the bank.

> I'm just not sure his rationale is completely objective given such a structure...

Which is why the board would have to approve the deal and he can’t act alone on it. He was hired to create and execute the strategy including finding the target. The real question is, why did he get hired to do something anyone could have done?

The first two market cap hurdle is almost certain to be achieved, and the second should be easy (its less than current market cap plus value of new equity to be issued).

I was under the impression that it was either or, not both. Either reach market cap goal or EBITDA.

It doesnt really change much, by buying a company its future ebitda will be included, it only delays the reward by some time. So yes he can just buy a bigger company

> Banks aren't stupid.

Even a cursory familiarity with the history of the industry shows both that this is untrue but also that it’s leaving out many of the core reasons why finance is regulated. Bankers do make mistakes, but also their focus is on what makes them a profit now rather than what’s good for their client or the country long term. The bank does not care if GameStop goes bust as long as that happens after the loans are repaid or, most likely, sold. None of the guys who sold incredibly dodgy mortgages—if you weren’t in the market in the late-2000s, they would literally let applicants pencil in their income and not check it—went to jail for packaging those mortgages up so many times removed that they couldn’t reliably prove the loan even existed and reselling them with inflated ratings, and absolutely none of them had to repay their bonuses. Once they found a buyer for an “AAA” derivative, foreclosure was a problem for the retirement fund left holding it after a couple of sales.

That’s what I’d expect here, too: they’ll make some flashy announcements to juice share prices (“AI powered auctions paid in crypto!”) and sell that debt, spin whatever’s left into a subsidiary which splits off, and then profess complete surprise when that goes bankrupt.

> Banks aren't stupid.

If they can gamble with other people’s money then why won’t they.

If they can get rid of those liabilities by offloading them in a hidden way why wouldn’t they.

If it all collapses and the government bails Them out, oh well.

It is different. You need somewhere to live. Buying a second home with what would presumably need to be at least a 90℅ mortgage is at best questionable.

> Cohen is already rich rich, his GameStop compensation doesn’t really matter much

I think this argument is much stronger in the opposite direction: if his motivations were not focused on accumulating wealth, he’d be retired or running some kind of charity once he was that far past the point where he had to work. The fact that he’s not suggests that he derives his self-identity from wealth and the guys who do that are rarely satisfied at mid-tier rich.

Few CEO’s in the US are rewarded for longterm thinking when there are unsustainable quarterly gains to be made. GameStop also has a strange history, especially the last decade, that no one could possibly describe as “cautious” or “planning longterm.”

I also can’t name a single CEO who had the mentality of “I’m rich enough to make personal/financial sacrifices for the good of the company.” That’s simply not how things work. I’m sure an example exists but it would clearly be an exception to the rule.

I'm not sure the fact that somebody is already rich rich would make them less likely to perform ethically dubious practices to juice their own compensation. In fact I'd say the opposite is more likely.

If there's anything rich people famously hate, it's making more money.

they will be getting 20% more than what Ebay is worth today

I don’t understand either but wouldn’t they still be owning eBay? Just with GME?

Yes. See [1] for an overview of how this works.

When the SEC filing is made, we'll get to see how the deal is structured. The $20 billion from TD Securities becomes a debt obligation of the combined company. There's a tax break in equity to debt conversion, and a second tax break for carried interest. [2] There may be a preferred stock deal or debt refinancing so that TD gets their $20 billion back. Usually, the private equity firm exits within a few years.

[1] https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.23.1.121

[2] https://www.pgpf.org/article/what-is-the-carried-interest-lo...

No, unless any control transaction using any leverage counts.

A third of the deal is financed with debt. A fifth is financed with cash. The bulk—fifty percent—is being financed with equity. An LBO would see debt and a thin tranche of cash finance the bulk of the acquisition.

The stock part is more like a merger than a buyout.

Yup.

That's just for the cash part. The stock part makes no sense. For this 50/50 deal to work in principle, they'd need to issue around a billion new shares, which would massively dilute the existing ~450M shares. So Ebay shareholders would suddenly own 70% of Gamestop after the deal. It's also highly questionable if investors actually believe the combined stock is worth that much, so the stock price would probably fall and turn those 70% into >90%. At this point it basically becomes a reverse acquisition plus a large loan for the final company from the cash part of the deal.

How is a 20bn company going to issue 27bn worth of stock? Or are they just going to pretend the newly issued shares are valued the same per share as existing stock is right now?

They already increased total number of stock by +39% in last 12 months, GME will squeeze the last penny from those people.

Perhaps that is part of the scam here. Meme stock buyers will think this means something and will spend more on worthless shares so that ebay executives can sell.

They can sell now and pocket some extra money. What's not to like?

Yes, that goes into the '50% cash' part of the offer. With a 20B credit line and 7.5B cash from their own coffers (which they claim to have, so let's believe them on their word there), you cover the cash portion.

The issue is the non-cash portion of the offer. They claim that the remaining 27.5B is covered by GameStop stock. But that's more than double the market cap of GameStop.

It is implicitly implied in many comments.

I think you are under reacting.

Why wouldn't they? Before he showed up, Gamestop had years of negative earnings per share. They haven't had a negative EPS quarter in almost 2 years, now. That seems like a serious turnaround.

I think we also all assume that it is probably not a healthy feature of capitalism.

AOL/TimeWarner, Kmart/Sears… lots of prominent examples.

They better not ruin eBay, it's actually a useful business, I use it all the time

Is there anywhere a good breakdown of these leveraged acquisitions. Like a video or something that breaks down how that exactly works and why its legal and why the acquired company goes along with it. Its seems like such a strange mechanism. And the history of it.

Agreed that Marvin would find this (and everything about Earth) ridiculous.

I propose this would make sense in the animal kingdom though; large, lumbering fatty walks along. It has big claws, but … it doesn’t look like it can be bothered to be dangerous anymore. Meanwhile a pack of hungry successful hunters walk alongside. To take this down, they will risk pretty much everything..

It’s the same story. The shareholders provide a sort of bet on if the big guy has still got it, or the risk-on hunters do.

That’s why the operational results got attention in Cohen’s letter — he’s telling Shareholders: “I turned around GameStop. I can turn this ship around, too.”

GameStop has zero debt and billions in cash on its books. It is not a stretch for them to be making this offer. It really does make sense here for both sides.

What would make it better? My only complaint as a seller is fees. I have no complaints as a buyer.

The best part is eBay works exactly the same as 10 years ago, as far as I can tell.

I use it more frequently than Amazon for used books and DVDs. It's cheaper and the sellers are often exactly the same.

It's not great for sellers either. I was banned during the time period before the Paypal divestment for having the galls to subpoena a nonpaying buyer's records. They take a cut from both sides. Sotheby's takes 10.5% (I think). eBay takes twice that for something comparable in value.

And yet, it's still the place to go to buy anything secondhand or used. I'd go so far as to say eBay could be nationalized under the Defense Production Act due to the critical role it plays in manufacturing by keeping obsolete manufacturing machines running.

It’s still way better than Facebook marketplace. At least eBay mostly solved the scam issue. Zuckerberg seems to desire fraud on his platforms.

> ...sneaker company that pivoted to data centers set the 'weird' bar pretty high...

"Weird" is the wrong word for Allbirds. "Fraud" is far more fitting. They obviously have no intention running an AI-datacenter business and are doing it for the stock-price rush. A small number of people will be laughing all the way to the bank, and everyone will forget Allbirds in short order.

Ebay has a history of being legit, though they have had a long list of uncanny acquisitions themselves (including Skype, which they later sold for a stiff loss). It's a pity they couldn't just execute on their core business and are now being acquired themselves by an entity using sketchy financial shenanigans.

Who's going to stop a few rich people with a pile of money and a stated intent of doing something they have no intention of doing? No one, I guess. I mean, there's plenty of examples. Supermicro is still listed on NASDAQ even though one of their founders was caught smuggling export-controlled GPU's in Supermicro servers to the tune of 2.5 billion dollars a couple months ago.

Based on my own experience with GameStop, that will convince me to stop using eBay completely.

EBay is running a platform (very successfully) not a pawnshop.

Is that market really that large? That sounds very niche, but I don’t know the collectible world

What about the company's profitability? Did that continue to decline as well?

I mean he pumped and dumped BBB, and those people (or should we call them apes?) still love this guy.

those guys have a very strong track record of getting their way lately

I did some digging today and learned that he currently takes no salary and stands to make an unbelievable amount of money if he hits certain (pretty unreasonable apparently) benchmarks. I think it was $35billion. My very armchair guess here is that he’s just trying something incredibly loud, brazen, and ambitious because at this point what else can you do? They’ve been falling apart for years, the business has not turned around at all even after the wildly inflated shares they sold to get some liquidity.

He’s already rich and GameStop is falling apart, so really what’s the risk to him if it all goes under? May as well try a moonshot and move on. It’s not like anyone will hold him accountable for failing to turn around a ship that was already deemed sinking many years ago.

Not trying to get into conspiracies, but about a month ago Michael Burry revealed that he opened a position in $GME which seemed very strange. Now with the news of a potential eBay acquisition I wonder if he's in on this pump and dump scheme if that's what it is.

I once saw a pair of "very used" ready-to-rumble promotional boxers for bidding at $99 or buy it now for $1300

I believe it is still a meme stock in the dark, "lose money quickly" corners of the internet.

Liquid Assets:

May 2020: $570.3 million

Jan 2026: $9.013 billion

I don't know what I was expecting but I didn't walk away from that with any confidence in Ryan's abilities.

The company (stock) subs are always echo chambers of the worst kind, bordering straight up cults.

Bed Bath & Beyond (BBBY) being one of the worst / most hilarious ones.

Tcgplayer is mostly a marketplace, I don't think physical presence does anything for them.

They can't include it in EBITDA

Yep! Always helps when you have sweat equity or some clever idea.

LBOs can have other formats. Take Debt, assign debt to part of the company, auction off arms, legs, kidneys of company to pay off debt... you're left with a shell of your former company but a boatload of cash to pay off the debt and everyone gets their bonuses.

Unfortunately a lot of LBOs tend to result in job cuts. The Twitter deal was a bit of that sort of thing, and we all see where that went.

Not exactly,

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

He has to hit both the market cap and EBITDA for each tranche of his compensation plan to vest. He could do this by growing the core business, or by doing a merger like the proposed eBay one. Even if such a merger was very dilutive, even value destroying, it could help him vest a tranche he otherwise would not, for more value than the dilution reduces his position.

To be absolutely clear, I hope+think in practice that he is aligned with shareholders, especially given that the market cap restrictions appear much easier to hit than the EBITDA ones, but it's important to be precise because there's so much misinformation going around.

"Normal" for M&A, and if you drink enough finance kool-aid it even makes sense, but then you step back, and go wait, no it doesn't!

This very specific corner of the internet has no idea how your metaphor is supposed to work, which is why I like it so much.

eBay isn't doing itself any favors these days, the site seems to have issues on a regular basis and they're heavily promoting collectible/gambling garbage on the site. If anything eBay and GameStop seem perfect for each other.

eBay is too easy to take for granted if you've never tried buying or selling things on FB Marketplace or Craigslist. Having people over the internet trade things with minimal middleman is a really hard problem, and someone will always get scammed somewhere.

In this case, if the deal goes through at the price given, eBay's liquid assets are untouched. The cash portion is paid out entirely through the loan and Gamestop's cash.