After some whispers and one “people familiar” story, GameStop has broken cover with a public and apparently hostile bid for the much larger eBay. Here’s MainFT’s news story:
Video game retailer GameStop is making a $55.5bn unsolicited offer for resale web giant eBay, the company announced on Sunday evening.
GameStop has built a 5 per cent stake in eBay and is offering $125 a share, half in cash and half in stock. That represents a 46 per cent premium to eBay’s closing price on February 4, the day GameStop began accumulating its position.
In a letter to the chair of eBay’s board, GameStop’s chief executive Ryan Cohen said he believed a merger could cut costs and boost earnings. Cohen also said that GameStop’s roughly 1,600 US stores would give “eBay a national network for authentication, intake, fulfilment and live commerce”.
This is catnip to Alphaville for countless reasons, so we moseyed on over to the site that GameStop has set over for its proposal letter and associated docs. We have more questions and snide comments than answers, unfortunately, but here goes.
GameStop’s master plan
So how is GameStop’s CEO Ryan Cohen — a near-messiah to the meme stock crowd after the role he played in the 2021 merriment — going to make GameBay a success? Surely the rationale must involve something truly radical, daring and transformative?
Um, it’s mainly just killing the auction’s site marketing budget:
eBay spent $2.4 billion on Sales & Marketing in fiscal 2025 while only adding one million net active buyers (134M to 135M — a net increase of less than 0.75%). GameStop will deliver $2 billion of annualized cost reductions within twelve months of closing:
~$1.2 billion from Sales & Marketing. More spend is not producing more users on a marketplace with near-universal brand recognition.
~$300 million from Product Development. Product Development expense grew 11% in fiscal 2025 against revenue growth of 8%.
~$500 million from General & Administrative. Consolidated finance, HR, real estate, legal, IT, and professional services across the combined company.
Okaaay.
Sure, there’s some other guff about how GameStop stores would give eBay “a national network for authentication, intake, fulfilment, and live commerce”, but that’s a pretty vague hand-wave. The lack of stores has hardly held back eBay so far.
Simply slashing the marketing budget and trimming admin staff to make the metrics look good feels like something a first-year private equity associate would propose. Hey, maybe it works, but it’s hardly a brilliant gambit no one else could come up with.
The financing
GameStop has a lot of cash on its balance sheet thanks to share sales to tap into periodic bursts of retail trading frenzy and by selling convertible bonds as part of a seemingly halfhearted “bitcoin Treasury” gambit last year.
As a result, the company had about $6.3bn of cash, $2.7bn of “liquid investments” — whatever that could be at a company like GameStop — and about $368mn of bitcoin, as of the end of January. GameStop proposes to pay for half the acquisition in its own stock, so where is the remainder coming from?
The cash consideration is expected to be funded from a combination of (i) cash and liquid investments on GameStop’s balance sheet, which totaled ~$9.4 billion as of January 31, 2026, and (ii) third-party acquisition financing, in respect of which GameStop has received a highly-confident letter from TD Securities for up to $20 billion.
A highly confident letter. From TD Securities.
Look, no slight to TD, as fine a Canadian investment bank as you can find on God’s green earth. But this is hardly a highly-confident letter from Drexel Burnham Lambert in its heyday. Or even a solid financing commitment from a large US bank like JPMorgan, or a club of Europeans banding together.
Alphaville would love to read the fine print of TD’s agreement with GameStop — while Cohen’s letter to eBay’s board is public, the attached TD letter isn’t — but our gut screams that this is shaky as hell.
Highly-confident letters aren’t binding, and the only reason why Drexel-backed raiders were able to brandish them like magic weapons back in the 1980s was the credibility of Mike Milken and the high-yield market he had nurtured forth.
Could GameStop fund the deal if the board embraces them? Probably. At some price almost anything can get done. But credit markets aren’t quite as healthy as they were earlier this year, and Alphaville suspects the eBay board will want something firmer than a vague promise to try from a top-five player in Canada.
Update: Watching Cohen’s car crash interview on CNBC won’t make GameStop’s financing package or strategy any clearer, but there are worse ways to kill a few minutes. The best stuff starts at about the 2:09 mark.
Those pesky 13Ds
GameStop said on Sunday that it began accumulating a position in eBay on February 4, has now acquired a 5 per cent “economic stake” through shares and derivatives, and it would therefore be filing a “Schedule 13D” today.
Regular Alphaville readers might remember 13Ds from some of Elon Musk’s previous skirmishes with the US financial-regulatory system. Schedule 13D is a filing that has to be sent to the SEC within 10 days of acquiring directly or indirectly 5 per cent of a public company, and then be updated whenever the stake goes up or down by 1 percentage point.
It has now landed, and reveals that GameStop has only actually bought 25,000 shares of eBay. However it has acquired “economic exposure” to 22.2mn through combinations of put and call options.
. . . GameStop has entered into a series of options transactions (the “Put/Call Pairs”). Each Put/Call Pair is structured as an American-style option, which permits GameStop to exercise the Put/Call Pairs at any time prior to the expiration date of February 23, 2028 (the “Expiration Date”). Upon exercise, GameStop will be entitled to settle the Put/Call Pairs solely for an amount of cash representing an in-the-money amount of the options until the counterparty has been provided with reasonable evidence that the HSR Act Condition has been satisfied.
After providing evidence of satisfaction of the HSR Act Condition, GameStop shall be entitled to, at its election, physically settle the Put/Call Pairs for a total of 22,176,000 shares of Common Stock or choose cash settlement. The settlement will be based on the strike price upon exercise, and the source of funds to be used by GameStop to settle such shares of Common Stock, to the extent GameStop elects physical settlement, is anticipated to be cash from its working capital.
However, the trading data attached to the filing indicates that the put/call pairs on 12.6mn of eBay common shares were bought in March 4, not in February, and there’s nothing on when the rest were bought. GameStop’s small purchase of 25k of ordinary stock on May 1 then apparently pushed it over the 5 per cent mark and started the clock on a 13D filing and going public.
We assume Cohen and GameStop is less cavalier about filing requirements than Musk, so there’s something here we’re missing. Or maybe there’s just a big omission, like forgetting to say that another 10mn of indirect share exposure was acquired on February 4, when GameStop says it started building its position.
OK not the biggest issue here, but given Alphaville’s interest in recondite regulatory filings, the use of derivatives to build pre-acquisition stakes and the SEC’s new approach to these matters, we thought it was interesting.
What could have spurred GameStop’s gambit?
GameStop, January 7, 2026:
GRAPEVINE, Texas–(BUSINESS WIRE)– GameStop Corp. (NYSE: GME) (“GameStop” or the “Company”) today announced that its Board of Directors has granted a performance-based stock option award to Ryan Cohen, the Company’s Chairman and Chief Executive Officer. The award is designed to incentivize Mr. Cohen to achieve extraordinary growth. In order for the award to fully vest, the Company’s market capitalization would have to grow to $100 billion and the Company would need to achieve $10 billion in Cumulative Performance EBITDA (earnings before interest, taxes, depreciation and amortization).
Oh.
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