Ryan Cohen makes a longshot run at eBay. Analysts see little chance GameStop can pull it off
Analysts are throwing cold water on the idea of GameStop acquiring eBay , citing a lack of functional overlap between the two businesses and only superficial financial benefits that they say are unlikely to win approval from eBay’s board. Strong recent performance by eBay — shares are up 26% this year — along with the fact that it’s a much larger company than its proposed acquirer, are also factors working against the viability of the deal, multiple Wall Street firms said. “There seems to be a lack of meaningful synergies between the two entities in our opinion,” Youssef Squali of Truist Securities wrote in a Sunday note to investors. “Rather than drive enhanced proposed profitability through revenue growth and synergies, all of the expected EPS improvements would be coming from cost cuts to [sales and marketing, product and development, and general and administrative].” EBAY YTD mountain eBay shares in 2026 Analysts with Bernstein noted some operating overlap across games, toys and collectibles, but said the difference in scale between the companies would make it hard for the commonalities to be a source of real gains. “EBAY operates at a far bigger scale with a more diversified business,” Nikhil Devnani and colleagues wrote for Bernstein. “We’re not clear on what GME would bring to the table strategically that would further enhance EBAY’s offerings.” A major difference in size GameStop proposed to acquire e-commerce giant eBay for $56 billion at $125 per share in a half-cash, half-stock transaction, representing a 20% premium to last Friday’s close of $104.07. GameStop itself has a market cap of about $11 billion and $9.4 billion on its balance sheet as of January, plus third-party financing from TD Securities of up to $20 billion, according to a company statement. That sums to about $40 billion – far short of the $56 billion price tag for eBay. Analysts with Truist Securities said they were “skeptical” considering that “eBay’s market cap is ~4x that of GME and the proposed $56B offer is 5x GME’s market cap.” CEO Ryan Cohen, in an interview with CNBC , declined to answer where the remainder of the money for the sale would come from. “We’ll see what happens,” he said tersely after being pressed on the question. Bill Smead, chief investment officer for Smead Capital Management, which is the sixth largest active owner of eBay among mutual funds, told CNBC he was wary of a potential pump-and-dump play. “We have no idea if this is legitimate and/or will go through. The last time meme trades were happening we reduced ownership of anything growth related,” he told CNBC through a press agent. “We have avoided meme trade companies, and it is disconcerting to pump and dump, if that is how it plays out.” A ‘meme multiple’ GameStop became a defining “meme stock” in 2020 when online enthusiasm from retail investors managed to upend short positions on the company from multiple hedge funds, turning the stock into a surprising winner while tanking some funds that were betting against it. Colin Sebastian, senior analyst with Baird Equity Research, said he thought the logic of meme trading, drawing upon the exuberance of online investing communities, might be at play in the current proposed acquisition. “We assume GameStop is also considering the potential for a ‘meme multiple’ on combined earnings of the combined company,” he wrote. By contrast, traditional e-commerce giant eBay has been performing well in recent quarters. While its strong cash flows and margins make it a potentially attractive target for a leveraged buyout, the solid multiple on its stock makes it unlikely to be viewed as undervalued, analysts said. “EBay’s leadership in re-commerce and high-margin verticals fits the private equity playbook. However, eBay’s stock is trading at historically elevated multiples, which could constrain valuations for many PE firms,” Brian Pitz, analyst with BMO Capital markets, wrote in Monday note. GameStop is projecting about $2 billion in cost reductions from the proposed half-cash, half-stock acquisition, but analysts view these savings as coming mostly from the administrative level than from core products and distribution. “While the transaction screens as accretive, the outcome is driven by financial engineering rather than operating synergies, raising the risk, in our view, of long-term platform competitiveness,” Baird’s Sebastian wrote in a Monday note.
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