While no trader or seasoned investor I spoke with thinks Ryan Cohen, the CEO of GameStop, will actually manage to acquire eBay, I think it’s still wise not to dismiss him. There are some valid doubts, certainly. For instance, eBay’s market size is significantly larger—around five times that of GameStop. Plus, the meme-driven investors who back Cohen seem largely confined to the retail stock scene.
Recent discussions surrounding Cohen’s ambitions haven’t helped his case, either. His interviews on CNBC have come under scrutiny for being inconsistent and sometimes vague, particularly when he was asked how he plans to fund these potential trades.
It was lightheartedly mentioned at last week’s Milken Global Conference that he failed to clarify the numbers behind eBay’s valuation—like the apparent mismatch of $9 billion in cash and $20 billion in debt, which doesn’t exactly lead to a $53 billion market cap. Cohen insisted the “details are on our website.”
Then again, eBay shareholders have enjoyed solid performance over the last five years, bolstered by a profitable management team. It’s understandable then that eBay dismissed Cohen’s proposal as “not reliable or attractive.” Many on Wall Street, including likely members of eBay’s board, seem to suspect Cohen plans to shore up any financing gaps by further diluting GameStop’s shareholders.
This raises the question: Who among eBay’s investors would want shares in a retailer that’s barely profitable, isn’t attracting many visitors in-person, and has a notable stake in Bitcoin?
There’s merit to skepticism regarding Cohen’s intentions, yet I find myself wary of those who outright dismiss him. GameStop, as Cohen openly acknowledges, isn’t the best business, yet it’s managing to hold its ground. He took over GME in 2023, right as the stock was peaking during the meme frenzy.
Though the company has dropped from its highs, Cohen has effectively navigated its challenges by trimming stores and growing cash reserves through shareholder dilution. This approach is a sound strategy—yes, the stock’s buoyancy is still linked to meme enthusiasm, but the financial fundamentals are starting to look better.
Other meme stocks have taken a dive, and currently, GME sits at a $10 billion market cap. Cohen seems to be seeking a way out for GME, exploring routes like cryptocurrencies and challenging eBay.
Bob Sloan, founder of S3 Partners and my podcast co-host, has a long history on Wall Street. He’s picked up on a potential strategy behind Cohen’s eBay ambitions, suggesting he’s after something, though it might not fit the conventional narrative.
Cohen, unfazed by eBay’s dismissal, hinted at the possibility of a hostile bid earlier this week. It sounds a bit out there, but honestly, is it any more surprising than his initial GameStop investment?
