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Photo: Forbes |
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GameStop just casually went from a meme stock to… ummm, possibly the next big thing? |
It was a sleepy Sunday until GameStop (GME) woke up and chose (financial) violence — in the most strategically unhinged way possible. 💰 |
The company dropped an unsolicited bid to acquire eBay (EBAY) at $125 per share, valuing the platform at around $55.5 billion — a juicy premium around 46% as of Friday’s closing price that’s hard to ignore. |
The offer is split evenly between cash and stock, and rumors about this move have apparently been floating around since January. 🍿 |
Which is kinda funny, considering that GameStop was pretty much on its deathbed a couple years ago before all that Wall Street Bets and shorting fiasco. |
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Damn, times sure change… fast. ⏳ |
At the center of it all is Ryan Cohen, who’s making it very clear this isn’t just a random shopping spree. 🛍️ |
In a nutshell, his pitch is basically that eBay is under-earning, under-optimized, and sitting on FAR more potential than people give it credit for. In fact, he genuinely thinks it could become a real competitor to Amazon. |
Bold claim… but he’s not exactly known for playing it safe. And we’re so here for the drama! 😏 |
From a financial standpoint, the numbers are doing a lot of talking. GameStop is apparently sitting on about $9.4 billion in cash and has up to $20 billion lined up in debt financing. Yes, that still leaves a very wide gap, which is why analysts see more stock issuance potentially on the table. |
…which means all the dilution fears are very real and would very much explain why shares of GameStop fell on Monday. 📉 |
But overall, the idea is interesting and pretty solid. The plan is for GameStop to use its physical stores (they got about 1,600) as infrastructure for eBay — think fulfilment hubs, authentication centers, even live commerce spaces… etc. |
Then there’s the cost-cutting angle. |
GameStop is targeting $2 billion in annual savings, going straight after eBay’s $2.4 billion sales and marketing spend. If they pull that off, they’re projecting eBay’s EPS could jump from $4.26 to $7.79 in year one alone. 📈 |
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Investors, however, are not fully buying the dream — at least not yet. |
While both GameStop and eBay initially popped on the news in afterhour markets, Monday trading told a different story. |
GameStop shares dropped by over 10%, while eBay climbed another 5%, suggesting that investors love the idea for eBay… but aren’t fully convinced GameStop can actually pull this off. 👀 |
Which is honestly not unfair, because a $12 billion company trying to acquire someone nearly four times their size takes some serious confidence and ambition. |
But then, remember that if there’s one thing we’ve learned from GameStop over the past few years, it’s that betting against them has not exactly been a winning strategy. 😏 |
So now the ball is in eBay’s court, or potentially, that of the shareholders. |
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