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New York —
It’s not just in your head: GameStop’s pursuit of eBay doesn’t seem to make a lot of sense.
ICYMI: The video game retailer on Sunday made an unsolicited offer to buy eBay, a company nearly four times bigger than GameStop, for $55.5 billion, or $125 a share — a 20% premium to eBay’s Friday closing price. GameStop said the deal would be financed 50-50 in cash and stock. (That’ll become important later, stand by.)
Ebay said it was reviewing the offer.
Maybe you’re thinking, “Eh, companies buy one another all the time, what’s the big deal?”
This is not one of those run-of-the-mill acquisition offers, and analysts were mostly left scratching their heads. (That doesn’t include the diamond-hands crowd on Reddit and other retail investing sites, where many who view GameStop CEO Ryan Cohen as a kind of Millennial Warren Buffett were quick to praise the eBay effort.)
For starters, the math doesn’t quite math, according to several analysts.
GameStop, which has already built up a 5% stake in eBay, is worth about $11 billion, and has about $9 billion in cash. Then there’s another “highly confident” (but not locked in) $20 billion in debt financing from TD Bank, according to GameStop.
So in theory that gets you to $40 billion. Where’s the other approximately $16 billion coming from?
Cohen, GameStop’s CEO, answered the question thusly in an interview with CNBC’s Squawk Box on Monday:
“It’s half cash, half stock,” Cohen said. “The details are on our website.”
One of the show’s co-hosts, Andrew Ross Sorkin, kept pressing, walking Cohen through the numbers and asking him again about the shortfall.
“Yeah, we’ll see what happens,” Cohen said. Sorkin, seemingly baffled, tries again.
Sorkin: “I’m just trying to understand where the rest of the money would come from.”
Cohen: “Half cash, half stock.”
Sorkin: “I hear you, I’m just saying that math doesn’t get you to the price that you’re offering.”
Later, Cohen states: “We have the ability to issue stock in order to get the deal done.”
But issuing new shares dilutes the value of the stock, and is typically seen as a red flag — all the more so when a smaller company is trying to buy a larger one, a dynamic that usually raises questions about whether the deal is financially realistic to begin with.
GameStop didn’t respond to a request for comment.
GameStop shares fell 10% Monday, a sign of investor skepticism. EBay’s surged 5%.
Apart from the financing questions that remain unanswered, analysts are also skeptical of Cohen’s vision of building a “legit competitor” to Amazon, as he described it to The Wall Street Journal.
GlobalData retail analyst Neil Saunders described the proposal as “a David trying to take over a Goliath in order to buy David relevance.”
“EBay is a successful business that has a very clear proposition, a clear rationale for existence,” Saunders said in an interview. “Whereas I feel that GameStop is a company that is sort of grappling with a reason to be around.”
Once a shopping mall staple, GameStop was on the verge of bankruptcy after years of declining sales. In 2021, its stock became the center of an online campaign by amateur investors hoping to drive up its value and “squeeze” the short-sellers who’d bet on its demise. Cohen joined GameStop’s board that year and pressed the retailer to cut costs and expand inventory to include higher-margin collectibles. The result has been a mixed bag, with its store count roughly in half since 2020, but the company posted net income of $418.4 million in fiscal 2025.
EBay, whose shares are up more than 55% from a year ago, is hardly in need of a savior.
GameStop’s rationale for the deal centers on merging eBay’s online shopping power with GameStop’s 1,600 brick-and-mortar locations. The game retailer said it could deliver $2 billion of annualized cost reductions within the first year of closing, slashing marketing and sales costs and streamlining operations.
In theory, that could give eBay sellers a bigger network for fulfilling orders and authenticating collectibles. But analysts are also dubious of that supposed edge.
“I don’t sense that there’s a lot of clamoring by eBay’s customers to go somewhere to pick up a product,” Sky Canaves, a principal analyst covering retail and ecommerce at Emarketer, said in an interview. “The whole promise of an online marketplace is that you have nearly unlimited reach. You can buy and sell goods anywhere in the world, because you’re not constrained by what’s available in a physical store.”
Saunders, similarly, said that while there is some customer overlap in electronic collectibles and trading cards that might make sense in a GameStop location, there is plenty of inventory — think vintage jewelry, luxury goods, art — on eBay that simply wouldn’t fit in.
And those sellers, Saunders added, already have a vast fulfillment network that’s been working for decades: “It’s called the post office.”
Cohen, who founded the online pet food company Chewy before cashing out in 2018, has a huge financial incentive to pull off the eBay deal. At the start of this year, the GameStop board adjusted his compensation package so that he’d make as much as $35 billion in stock if the company meets certain thresholds, like reaching a market value of $100 billion.
“It’s kind of a vote of confidence in his ability to drive GameStop as a meme stock,” Canaves told CNN. “But how much further can it go? Can it 10x just from him willing it to be so? It seems like he has to come up with another plan to to make GameStop bigger than it is. Much, much bigger.”
Cohen downplayed the pay package incentive in the CNBC interview.
“I obviously want to build something much larger, but I don’t benefit unless shareholders benefit.”
