GameStop makes $55.5B takeover offer for eBay
bbc.co.uk671 points by n1b0m a day ago
671 points by n1b0m a day ago
The original shorting of GameStop back in 2021 gave them a bit of a boost back into the green. While people were doing the GME to the moon, GameStop made more shares to sell, and paid off a bit of its debts, I think it made about a billion dollars in profit, they're still struggling, but it helped prolong their life.
A friend of mine also pointed out and this made it click for me that it makes 100% sense, GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.
This merger in theory could be good for both eBay and GameStop if they don't mess it up. Imagine being able to list your eBay items locally without having to have people needing to come to your house, or better yet, getting a cut of what you wanted up front since they're basically a pawn shop, and then they list it on eBay and turn a bit of a profit with a local pickup option available.
I could see this working out decently, assuming the CEO of GameStop doesn't mess it up completely.
"I think it made about a billion dollars in profit"
It raised over a billion dollars of capital (i.e. issued shares in return for cash). It did not make a billion dollars in profit (and has never had a year when it did).
Key financial results for Gamestop from the recent fiscal year (2025–2026) include:
Net Income: $418.4 million
Gross Profit: $1.196 billion
Total Revenue: $3.63 billion
Operating Income: $285.9 millionOperating income was $232.1 million, not $285.9 million.
https://investor.gamestop.com/news-releases/news-details/202...
That total revenue also declined 5% YoY
Total revenue declined because they closed stores. But income went up because those stores were losing money.
They also made a lot off of interest on their cash, but that is going to get cut by about 30% if this goes through, as the combined cash position Gamestop has access to declines from 9 billion to 6 billion. Or so I've heard.
Total revenue has declined for several years, -27% in 2024, -11% in 2023 (2023 rev was $5.9b, to $3.6b in 2025, this is a shrinking business).
They haven't had a genuinely good year in the last 15 years.
Their TTM revenue is down 66% from what it was in 2012.
In nominal dollars. In real dollars it's down 75%.
https://www.macrotrends.net/stocks/charts/GME/gamestop/reven...
And yet...
https://tradingeconomics.com/gme:us:eps
(Macrotrends has it, too.)
What's more important, revenue or profit?
Look at the 10Y. Still crap. No matter how you look at it this company is a dog.
You can't normally describe it as profit because stocks by rule trade at a fair price, but it's surely reasonable to consider in this case GME making a profit from the squeeze given they were selling a good well above fair acquisition price.
no, they issued more stock. stock is a claim on corporate equity, ie the delta between assets and liabilities. existing stock holders' claim to equity gets diluted when this happens, but share prices will often not be effected proportionally, making it appear the company has "made a billion dollars" when in fact they've just split the same pie into smaller pieces and managed to sell it at the same price. ryan now seems to think he can issue shares to acquire ebay, which will be much harder than fleecing retail.
The TLDR for people who don't intuitively understand why: existing shareholders are diluting their stake in the company by issuing new shares and getting money for those new shares. It's simply selling part of the company. Not profit.
You're conflating two things here.
Yes, in 2021 GameStop did sell shares to raise cash in a dilutive way. [1]
No, that is not being treated as profit or revenue.
Gamestop had ~418 million in profit in 2025. [2] A fraction of that profit does come from interest income. Ignoring that (say to value the business separate from the cash) they still made ~110 million in profit.
In my personal opinion (not financial advice) Gamestop with the cash it has today is a much more attractive investment than without. If you have worries about an economic downturn, it's a hedge. If you worry about GameStop being able to maintain it's current revenue/profit or volatility, it's runway. There's a variety of ways it reduces the risk of an investment.
[1] https://investor.gamestop.com/news-releases/news-details/202...
[2] https://www.sec.gov/Archives/edgar/data/1326380/000132638026... page 27 has the consolidated results.
>A fraction of that profit does come from interest income.
More than half of it came from interest income.
Gamestop has been unable to grow revenue since Cohen took over, failed initiative after failed initiative. The only thing saving them is their meme stock nature and a legion of people willing to throw good money after bad allowing them to dilute shareholders to build a warchest.
They have increased profit by closing something like 50% of their stores but you can't grow a retail company by constantly closing stores at some point you have to find a way to make the stores more profitable and in 5 years with tons of different attempts they've not found that. Revenue is down almost 50% in the past 3 years.
Having a pile of cash doesn't matter if you have a leader who has no good ideas for how to invest it to improve returns for shareholders, all it does is allow you to die for longer.
Not growing revenue yet being profitable seems far preferable to growing revenue yet having bigger and bigger net losses.
Shareholders seem to agree, as the stock went from formerly around $2.50 to present day about $92 (accounting for splits), dispute the dilution.
Tightening your belt is a good thing. No disagreement there but it has a hard limit. You can't just keep tightening the belt and growing profit, at some point you have to start revenue expansion again and from what I've seen Gamestop has no way to do that.
At $2.50 they had massive amounts of debt they couldn't service and a very real chance of going out of business. Then through pure luck they became a meme and were able to extract $10b from investors so of course they are worth more today. There is no growth story though so as meme investors get bored and move on it will move back down to it's asset value unless they find a way to grow again.
The meme investors can stay irrational long before gamestop gets a growth story. If they haven't given up on their get rich quick scheme that's lasted over five years now, I really don't think they're going to jump ship now.
The sad part is that gamestop is offering 55 billion, yet only has 9 billion in cash. The only way they come up with that much capital to buy ebay is to dilute the existing shareholders to a point that "to the moon" will just be moondust.
I was assuming it was going to be an LBO? Surely they don't plan to raise the money in cash.
>Not growing revenue
Not growing revenue would be one thing, they're shedding revenue at pace - 50% decline since 2020.
> Shareholders seem to agree
First, it's a meme stock. The market can remain irrational for long periods. Another way to analyze it - almost all of the market cap of ~$10b is the $9b in cash. The shareholder pricing tells you they value the business at it's cash assets.
Gamestop's business of physically selling video games, consoles, etc is a dying/dead industry. Nothing can change the trajectory of the market that is almost completely disappeared.
It's a Blockbuster or Tower Records, a dead business running on fumes and memestock valuation.
Well hey, what do you think about them buying eBay? eBay seems to think a lot of the value is in verification - grading cards, authenticating watches, shoes, handbags. GameStop has a similar business in collectibles and could provide eBay with a physical footprint that would let a lot of that verification happen easier, in-store.
The verification stuff is minimal. That's not where eBay makes it's bulk of money but it's a reasonable growth area. There's a huge opportunity though for eBay or someone to tie several loose ends and concepts together and have a serious competitor to Amazon.
I honestly don't know anything about ebay these days to comment on them but many many people have tried to make a business of providing a storefront for ebay in the past and they've basically all failed so I don't think that bodes well for the main offering Gamestop has.
Also Gamestops verification business is not done in stores AFAIK. I'm pretty sure they've just partnered with PSA to allow you to drop off cards at stores but they are sent away to be authenticated. The stores don't really add any value for most people in this transaction and add a potential downside in that there are multiple reports of Gamestop store employees stealing cards handed over for grading.
Training retail employees to be proper verifiers seems like a huge risk and a huge cost since you need to train them up on how to handle everything where with centralised grading locations you can have specialists(think antiques roadshow).
Worth also pointing out though that if you can sell new shares above intrinsic value that is accretive to existing shareholders. Dilution isn’t always a bad word. (It’s bad for the people buying new shares.)
Yeah I'm also always confused whenever I heard that a company issues new stocks. Why would existing shareholders agree for that? If there's more comprehensive resources about this I'd love to read it.
Well, partly it's an audience thing. Hacker News has a lot of folks who work at tech startups, and if you work at a tech startup, dilution is nearly always a very bad word for you.
If you work at a tech startup then you probably hope your company raises an additional round of funding, i.e. you hope you get diluted.
Isn’t that done with already existing shares (from the founders)? Then it wouldn’t be dilution.
No.
The main purpose of a funding round is for the company to sell shares and receive cash (e.g. to spend on marketing), not for founders to sell shares and receive cash (e.g. to spend on Ferraris).
(Sometimes, at the same time as a funding round, founders may also sell some existing shares to the new investors.)
Basically a ponzi at that point
Bubble? Yes. Ponzi? No. The latter requires some element of deception/fraud. Strategy Inc. (formerly MicroStrategy) was basically something similar. They had $x worth of bitcoin in a vault, but were selling themselves for $2x.
Well they are raising capital to hand out in dividends on their preferred stock. So that's much closer.
> GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.
It doesn't though. eBay could easily set itself up as a legal pawnshop in every state if it wanted to. It doesn't because there's no advantage to doing so.
There are already third-party sellers in many areas who will take your physical merchandise and sell it on eBay in exchange for a cut. eBay doesn't need to enter that market, it's simply not profitable enough.
You're right that there's no real advantage to eBay buying a pawnshop conglomerate, but a pawnshop conglomerate buying eBay gets a massive advantage. They're already sitting on a mountain of used inventory, and at some point a lot of it will be thrown away because there are no local buyers for it. Having a commission-free way to offload that inventory would be huge for them.
Ebay commissions are not that high, 13.25% for most items.
The barrier to listing huge amounts of merchandise is not the commission, but rather the amount of labor it takes to list and price everything and pack and ship it and deal with refunds and returns for items that turn out to have problems. And how a lot of items are only economical to sell locally, because when you add in shipping costs it approaches the value of buying something new.
Buying eBay doesn't provide any kind of easy way to help offload inventory at all. The way inventory is offloaded in bulk is in bulk pallets sold at auction, where people bid on them and then do all of the grunt work involved in photographing and listing and packing and shipping. Which is a significant proportion of sales on eBay today. GameStop can easily auction off pallets of their merchandise if they want, today. In fact, there's a good chance they already do.
> Ebay commissions are not that high, 13.25% for most items.
13.25% isn't zero.
> The barrier to listing [is] the amount of labor it takes to list and price everything
GameStop has a surprising amount of technology around their pawnshop activities. My son traded in his laptop last month and they had him wipe it, enable developer mode, and plug it in to do automated tests and make sure they knew what they were getting. They're already doing the labor to price everything. They're not going to have people type up listings, they'll just automate posting off of their inventory system.
> when you add in shipping costs it approaches the value of buying something new.
They get to skip the shipping costs. You could choose to have them ship the item to a GameStop near you which would cost them pennies. This is an advantage of having stores in every city with a population over 50,000 in the US.
And a huge amount of the stuff that GameStop buys and sells is out of print. Buying new is simply not an option when you're talking about a game that was released 6 years ago only on physical media.
> The way inventory is offloaded in bulk is in bulk pallets sold at auction, where people bid on them and then do all of the grunt work involved in photographing and listing and packing and shipping.
There must be money in the margins here. Otherwise people wouldn't do it. GameStop has all the technological ability to cut out this grunt work.
I'm just saying, 13.25% isn't the barrier here to making this work.
And shipping things to a "GameStop near you" does not cost pennies, and most people hate having to pick up packages. The reason that can be cheaper for regular stores is because they're distributing from central warehouses to those stores anyways. If GameStop is holding inventory trapped in all these physical stores, shipping an item from one store to another is no cheaper than shipping it directly to the customer -- e.g. it's edge node to edge node, not central node to edge node.
Interesting discussion. Something it made me think about is trading cards or other items you typically might want to sell as graded items. If you’ve got a physical GameStop with the digital eBay footprint maybe you’ve got the makings of a nice little ecosystem for selling Pokémon cards, video games, antiques, and other items in an inspected condition.
Neat - Setting up a eBay account for your company doesn’t cost $55B. I’m available as a part time CFO from now on
But the brick and mortar distribution is hard to build and gives a structural advantage. As another poster pointed out, you could sell your items locally and not need to deal with shipping, communication with buyers and other stuff. It would reduce friction which might actually expand the marketplace significantly. I personally have multiple family members that throw stuff away because listing on eBay is too hard and pawnshops too sketchy
Why does it give structural advantage to own a bunch of dead mall and strip mall brick and mortar stores that have been on the verge of bankruptcy for well over a decade?
They haven't been on the verge of bankruptcy since they paid off their own loans. This deal will actually be the closest they've been to bankruptcy since like 2022, because they'll actually have interest payments to make.
That's an accident of becoming a meme stock. That's not a business model.
Revenue continues to decline year over year. Nothing about the business has materially changed the trajectory they have been on throughout all of this. https://www.macrotrends.net/stocks/charts/GME/gamestop/reven...
https://www.macrotrends.net/stocks/charts/GME/gamestop/eps-e...
There's something else going on. The other companies known for being meme stocks are doing substantially worse in terms of share price. AMC is below what it was before early 2021, down 90% from its high. That holds for most of them. Bed, Bath, and Beyond famously went bankrupt.
Meanwhile, yeah, Gamestop is down about 75% from its high. But it's also 2.5x its post-top low, and... um, about 24x its 2020 low. Go ahead and check. Makes at least some sense, when you understand that they stemmed an EPS bleed and turned it into a profitable company.
A sinking company buying a healthy company several times larger and more profitable doesn't make sense. The eBay board and shareholders would be crazy to participate in this fantasy. GME shareholders are already known to be of questionable judgment, so whatever they do is SNAFU. So, it's not surprising GameStop would try something crazy, what's surprising is anyone is taking it seriously.
I don't know what your issue with Gamestop is, but calling it "a sinking company" is wildly inaccurate, bordering on delusion.