Investing.com — eBay (NASDAQ:EBAY) has permanently suspended GameStop (NYSE:GME) CEO Ryan Cohen’s account, citing “activity that we believe was putting the eBay community at risk,” according to a notice posted by Cohen. The move follows Cohen’s publicity stunt of auctioning approximately 25 personal items on the platform—including GameStop store signs, video games, and a carpet square—in what he described as “selling stuff on eBay to pay for eBay.”
The suspension comes days after GameStop announced an unsolicited $56 billion bid to acquire eBay for $125 per share in cash and stock, despite GameStop’s market capitalization of just $11.29 billion. Cohen had listed items that accumulated tens of thousands of dollars in bids before the suspension, with a GameStop mug reaching over $3,000 and a Master Chief statue exceeding $10,000. Each listing included a hand-signed copy of Cohen’s takeover proposal letter to eBay management.
The proposed acquisition has drawn sharp criticism from investors and analysts alike. Michael Burry, the investor known for predicting the 2008 financial crisis, sold his entire GameStop position after the bid announcement. “Never confuse debt for creativity,” Burry stated, expressing concerns about the deal’s heavy leverage.
GameStop secured a $20 billion financing letter from TD Bank, leaving a significant funding gap for the $56 billion deal. In a CNBC interview earlier this week, Cohen said the deal would be paid for with “half cash and half stock” but struggled to explain the financing math when questioned by anchors Andrew Ross Sorkin and Becky Quick.
Credit ratings agency Moody’s called the proposed deal “credit negative” for eBay, noting it would balloon the company’s debt from $7 billion to $31 billion.
Some have suggested Cohen may be attempting to leverage GameStop’s meme-stock status. If the publicity around the deal can boost GameStop’s stock, the deal becomes more realistic, as less cash would be required.
eBay’s board is scheduled to meet this week to review GameStop’s unsolicited bid, Semafor recently reported, citing sources familiar with the matter. The company has not yet issued an official response to either the takeover proposal or Cohen’s account suspension.
Cohen has previously suggested he would pursue a proxy fight for eBay board seats if management rejects the offer. The GameStop CEO, who sold pet supplies company Chewy to PetSmart for $3.2 billion in 2017, has promised to slash $2 billion in costs within the first year if the deal proceeds.
