GameStop Makes an Offer!
A video game retailer worth $12 billion has just announced an unsolicited $55.5 billion bid to acquire a company five times its size. The CEO appeared on CNBC unable to explain how the math works, repeating «the details are on our website» while dodging every substantive question. Meanwhile, the man who helped spark the original GameStop mania has quietly sold his entire stake, warning «never confuse debt for creativity». How did we get here, and what exactly is Ryan Cohen trying to accomplish?
Ключевые выводы
GameStop's offer requires issuing over a billion new shares — more than the company is currently authorized to create — meaning legacy eBay shareholders would own twice as much of the combined entity as current GameStop holders.
The $20 billion debt financing is backed only by a «highly confident letter» from TD Bank, not a binding commitment, and would be secured against eBay's cash flows, pushing leverage to 7.7 times earnings — a level Michael Burry called «bordering on distressed».
Cohen's compensation package pays out $35 billion if GameStop hits $100 billion market cap — acquiring eBay would get him 60% of the way there instantly, regardless of whether the deal creates value for existing shareholders.
The claimed 5% stake in eBay consists of only 25,000 actual shares; the rest is derivatives, which carry no voting rights — and Cohen's threat of a proxy fight came weeks after the nomination deadline had already passed.
The proposed synergies rely on using GameStop's 1,600 US locations for authentication and fulfillment, but the company is currently closing nearly 500 of those stores, undermining the entire strategic rationale.
Вкратце
GameStop's $56 billion eBay bid is funded with shares that don't exist, debt that isn't committed, and a business rationale that amounts to closing stores while promising to use them as a national logistics network — it's empire-building dressed up as strategy, designed more to hit Cohen's $35 billion compensation threshold than to create shareholder value.
The Impossible Math of a $56 Billion Bid
GameStop's financing plan relies on shares that don't exist and debt that isn't committed.
GameStop announced a $55.5 billion unsolicited offer for eBay despite having a market capitalization of only $12 billion — roughly one-fifth the size of its target. The proposed financing breaks down to $9.4 billion in cash and liquid assets, a $20 billion loan backed by a «highly confident letter» from TD Bank, and $28 billion in newly issued GameStop stock. The problems are immediately apparent: the debt commitment isn't binding, and GameStop would need to issue over a billion new shares to fund the stock portion — but the company's charter only authorizes 1 billion shares total, with 448 million already outstanding.
If the deal somehow proceeded, former eBay shareholders would end up owning roughly twice as much of the combined company as legacy GameStop holders. This isn't really GameStop acquiring eBay; it's closer to eBay accidentally acquiring GameStop, with Ryan Cohen volunteering to run the combined entity. The $20 billion debt would be secured against eBay's cash flows, not GameStop's, since GameStop's estimated EBITDA of $469 million and existing $4 billion debt load cannot support additional leverage. Michael Burry calculated the deal would push leverage to 7.7 times earnings, a level he described as «bordering on distressed».
When pressed on these details during his CNBC appearance, Cohen repeatedly deflected, telling anchors «the details are on our website» and claiming not to understand their questions. The interview became infamous for Cohen's refusal to explain how a company one-fifth the size of its target would fund the acquisition, instead insisting the math was simple even as anchors pointed out the $16 billion gap in financing. The performance was praised on Reddit as «savage», but institutional investors who own the majority of eBay shares were less impressed.
Cohen's $35 Billion Incentive
The CEO's compensation package pays out if market cap hits $100 billion, regardless of per-share value.
Cohen's $35 Billion Incentive
Ryan Cohen's recently approved compensation package awards him stock options worth up to $35 billion if GameStop reaches a $100 billion market capitalization and $10 billion in cumulative EBITDA within ten years. Acquiring eBay would instantly add $46 billion to GameStop's market cap, getting Cohen 60% of the way to his payout threshold. Crucially, the package rewards total market cap growth, not value per share — meaning Cohen benefits even if existing shareholders are massively diluted. This explains why the deal is structured to issue a billion new shares rather than pursue organic growth: empire-building is faster than value creation.
How GameStop Built Its «5% Stake»
Only 25,000 shares are real; the rest is derivatives with no voting rights.
The Bed Bath & Beyond Precedent
Cohen's previous activist play ended with an SEC investigation and bankruptcy.
Ryan Cohen's history with struggling retailers isn't encouraging. In 2022, he disclosed a large stake in Bed Bath & Beyond, drawing significant attention from Reddit retail investors who bought shares on the basis of his involvement. After the stock spiked, Cohen sold his entire position near the peak in August 2022. The stock subsequently collapsed, triggering an SEC investigation and a class action lawsuit alleging his disclosures and social media activity amounted to a pump-and-dump scheme. Cohen denied the allegations and was not charged by the SEC, though the class action survived a motion to dismiss before being rendered moot when Bed Bath & Beyond filed for bankruptcy.
None of this proves wrongdoing — investors are allowed to change their minds — but it does establish a pattern. Cohen enters a distressed company, generates excitement through public filings and social media, and then exits when the stock price spikes. The GameStop-eBay bid follows a similar playbook: a dramatic announcement that moves the stock, built on financing that may never materialize, with Cohen positioned to benefit from the attention regardless of whether the deal closes. eBay's board will have reviewed this history carefully before deciding how seriously to take his unsolicited offer.
Michael Burry's Exit Warning
The investor who sparked GameStop mania sold his entire stake this week.
“Never confuse debt for creativity.”
The Retail Authentication Fantasy
GameStop promises to use its stores for logistics — while closing 500 of them.
Where the Missing Billions Might Come From
When Acquisitions Became Optional
Non-binding bids generate headlines without requiring anyone to buy anything.
When Acquisitions Became Optional
We live in an era where making enormous M&A announcements with questionable follow-through has become fairly normal. SpaceX recently announced it secured an option to acquire AI coding startup Cursor for $60 billion — or alternatively, to just pay $10 billion for a collaboration and not buy them at all. Acquisitions have become optional; the $10 billion is just a conversation starter. Cohen's offer is non-binding, meaning if the bid falls apart, he can simply walk away. In the meantime, he's generated a massive news cycle, drawn attention to GameStop stock, and positioned himself closer to his compensation thresholds, all without having to buy anything.
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