By Martin Baccardax
Roaring Kitty posts. Ryan Cohen press tours. GameStop shares making news amid talk of a $56 billion bid for online marketplace eBay.
It feels like the meme-stock mania of five years ago, when GameStop surged to a market value of nearly $34 billion, fueled by retail investors and online trading during the work-from-home Covid era.
The difference today, of course, is how few people seem to be buying into the hype or falling in line with the efforts of GameStop's billionaire CEO Ryan Cohen to advance his company's acquisition of a company more than four times its size.
GameStop shares have fallen more than 13% since the retailer first made its bid for eBay on May 3, while eBay shares have gained around 3.3% -- still well south of the $125 target Cohen pitched in his letter to shareholders that day.
The gap between GameStop's bid and eBay's stock price reached 14% on May 4, but has been largely in decline ever since.
eBay chairman Paul Pressler, in fact, called GameStop's bid for the group -- built on a foundation of cash, shares, and help from a Canadian bank -- "neither credible nor attractive" in a Tuesday message and urged Cohen to forget the approach.
Presser said the company has "sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders" over the past several years. Two-decade investor Bill Smead agrees.
What Presser didn't say was that eBay shares have outpaced the tech-focused Nasdaq Composite index, and the broader S&P 500, since the current bull market began in October of 2022.
GameStop's shares, meanwhile, have been essentially flat since then, but they have lost more than $20 billion in value since their January 2021 peak.
Pressler also didn't mention Cohen's recent pay deal with GameStop, which pegs all of his potential earnings to performance-based stock options. If GameStop doesn't reach a $20 billion market value, nearly double their current level, or generate $2 billion in earnings before interest, taxes, depreciation, and amorization (Ebitda), a tally nearly six times GameStop's 2025 tally, Cohen won't get paid.
Nor did he mention the clause in TD Bank's "highly confident" financing letter that tied its $20 billion in financing to securing an investment-grade credit rating for the combined group. Moody's thinks debt could rise to $31 billion, four times higher than eBay's current level, with overall leverage that's around nine times the combined group's Ebitda.
Cohen, who took over as CEO of GameStop in 2021 but hasn't taken questions from analysts on any earnings call since then, gave his first public interview with CNBC last week. Some would say he was rusty.
"[eBay] is a business that is under-earning and can make a lot more money, and GameStop is a good blueprint for that," Cohen said.
"There's going to be some leverage on the balance sheet in order to make an acquisition possible," he added. "But it's also going to be making a lot more money in the future than it is today, because it's going to be run a lot more efficiently. If I was running the business, I'd be making a lot more money."
GameStop has had one truly profitable year in the past five, in the 52 weeks that ended in January, with small Ebitda tallies in 2024 and 2025 and losses of $250 million and $290 million in 2023 and 2022, respectively.
eBay recorded full-year Ebitda of $3.46 billion in 2021, the group's pandemic peak, with tallies ranging between $2.3 billion and $2.8 billion over the past four years.
Cohen has also indicated that he'll need to tap GameStop shareholders to fill in the gap between the group's $10 billion in market capitalization, the $9 billion it holds in cash, and the $20 billion pledge (at least in principal) by TD Bank. A quick read of the difference suggests GameStop would need to issue a least a billion more shares, at around $24 a piece, to get close to the $56 billion eBay target. But it would need shareholder approval to do so.
Even then, however, it's likely that eBay shareholders would maintain control of the combined company.
So, would GameStop shareholders, many of whom bought into the group on allegiance to some sort of stick-it-to-the-man credo, be happy to vote for the dilution of their own holdings with the hope of owning a minority share in a new company that would likely conform to Wall Street's ways?
Cohen might have a lot more work ahead of him to bring those investors into his new market reality. And it's not 2021 anymore.
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 13, 2026 03:00 ET (07:00 GMT)
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