GameStop Makes an Offer!

TL;DR

GameStop's CEO Ryan Cohen made a $55.5B unsolicited bid for eBay despite GameStop being worth only $12B, with financing built on nonexistent shares and a non-binding bank letter.

Key Points

• 1.GameStop's $55.5B eBay bid is structurally absurd from the start. GameStop has a market cap of ~$12B, meaning it's attempting to acquire a company roughly five times its size using half cash, half stock — with major problems in both halves.
• 2.The cash and debt components are weaker than advertised. The $9.4B cash includes $2.7B in unexplained 'liquid investments' and $368M in Bitcoin; the $20B loan from TD Bank is only a 'highly confident letter,' not a binding commitment.
• 3.The stock portion requires shares that don't legally exist yet. Issuing $28B in GameStop stock would require over 1 billion new shares, but GameStop's charter only authorizes 1 billion total, with 448 million already outstanding — shareholders would need to vote to create more.
• 4.If the deal closed, eBay shareholders would own the combined company, not GameStop's. Legacy eBay holders receiving ~1B new shares would outnumber GameStop's 448M existing shareholders, making this closer to eBay accidentally acquiring GameStop.
• 5.Cohen's compensation package creates a personal incentive to pursue size over shareholder value. His options pay out up to $35B if GameStop hits a $100B market cap — issuing billions of new shares inflates market cap without necessarily growing per-share value.
• 6.The business logic is thin and contradictory. Cohen claims GameStop's 1,600 stores provide a national authentication network for eBay, but GameStop is simultaneously closing nearly 500 of those locations; the cost-cutting plan mainly slashes eBay's $1.2B marketing budget.
• 7.Michael Burry — who helped spark the original 2021 squeeze — sold his entire GameStop stake after the announcement. His 'instant Berkshire' thesis assumed disciplined cash acquisitions; he calculated the eBay deal would push leverage to 7.7x earnings, 'bordering on distressed,' concluding: 'Never confuse debt for creativity.'
• 8.Cohen's proxy fight threat is empty and the bid is non-binding. The deadline for nominating eBay board candidates had already passed, and because the offer is non-binding, Cohen can walk away at any time — critics argue the real benefit is the news cycle and stock price attention it generates.