GameStop (GME) Stock Drops as Investors Question $56B eBay Gamble

TLDR

• GameStop CEO Ryan Cohen has made an unsolicited $56 billion bid to acquire eBay at $125 per share, a roughly 20% premium to its closing price.
• The deal would be financed with approximately $9.4 billion in cash, $9 billion in stock, and at least $20 billion in debt — raising serious concerns about leverage.
• GameStop has already built a 5% stake in eBay and has secured a $20 billion debt financing commitment from TD Securities.
• Michael Burry, a prominent GameStop backer, sold his entire stake after calling the deal’s financing structure “distressed.”
• eBay stock rose only about 6% to $110 on the news — well short of the $125 offer price — suggesting investors doubt the deal will close.

GameStop (GME) CEO Ryan Cohen has made a $56 billion bid to acquire eBay (EBAY), one of the most audacious takeover attempts in recent memory. Cohen wants to use eBay’s marketplace infrastructure to build a direct competitor to Amazon.

GameStop Corp., GME

The offer values eBay at $125 per share — a nearly 20% premium to where it was trading before the announcement. eBay stock responded modestly, rising about 6% to roughly $110. That gap between the offer price and where eBay is actually trading tells you everything about how skeptical the market is.

GameStop, the video game retailer with a market cap of around $11–12 billion, is attempting to buy a company nearly four times its size. The math is, to put it mildly, aggressive.

Cohen has proposed financing the deal with approximately $9.4 billion in cash, $9 billion in GameStop stock, and at least $20 billion in new debt — backed by a financing commitment from TD Securities. GameStop has also quietly built a 5% stake in eBay ahead of the announcement.

How Cohen Plans to Make It Work

Cohen’s thesis is straightforward on paper. He wants to repurpose GameStop’s approximately 1,600 US retail stores into a physical fulfilment network for eBay, turning the online marketplace into a more credible rival to Amazon. He’s also argued that the same cost-cutting playbook he used to stabilize GameStop could be applied at scale to eBay.

eBay said it is reviewing the proposal, including GameStop’s ability to deliver what it called a “binding, actionable proposal.” Cohen responded on CNBC by saying the company has the ability to issue stock to get the deal done if needed.

Morgan Stanley analysts pushed back, noting that the market needs more funding details and that the two companies have “fundamentally different” business models with few obvious revenue or cost synergies. They also pointed out that if funded as a leveraged buyout, this would surpass the recently announced $55 billion Electronic Arts transaction as the largest LBO in history.

GameStop fell about 2% on the day of the announcement, while eBay climbed only modestly — not the reaction you’d expect if investors believed this deal had legs.

Burry Exits, Meme Crowd Buys In

Michael Burry, the “Big Short” investor who had previously compared Cohen favorably to Warren Buffett, announced he sold his entire GameStop position. In a Substack post, Burry called the deal’s strategy “pedestrian” and warned it would lead to more debt and shareholder dilution. He argued that Cohen’s true aim was likely to dominate collectibles and used goods — not to actually compete with Amazon.

On the other side, retail investors piled back in. Vanda Research, which tracks independent retail trading, reported that the day after GameStop formalized its bid became the fifth-largest day of buying in the stock over the past 12 months. Reddit forums lit up with speculation about a “GameShire Hathebay” empire.

Cohen has said he is prepared to go hostile if eBay does not engage. His compensation package, unveiled in January, ties roughly $35 billion in potential rewards to reaching a $100 billion market value for GameStop — which gives him a clear personal incentive to pursue transformational deals.

eBay, for its part, had already been trading up nearly 20% year-to-date before this bid, following a strong earnings report last week.

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