GameStop (GME), the video game retailer, is making one of its boldest moves yet. According to a report from the Wall Street Journal, CEO Ryan Cohen has made an unsolicited $56 billion offer to acquire eBay (EBAY). The goal is to combine both businesses and build a stronger competitor to Amazon (AMZN).
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Cohen, who already owns about a 5% stake in eBay, believes the platform could be worth hundreds of billions of dollars over time. His offer values eBay at $125 per share, representing about a 20% premium to its Friday closing price of $26.53, and is split evenly between cash and stock.
To fund the deal, GameStop has around $9 billion in cash and has secured up to $20 billion in financing from TD Bank. Additional backing could also come from outside investors.
What Is the Rationale Behind Acquiring eBay?
The core idea is to combine eBay’s online marketplace with GameStop’s physical store network. Cohen plans to use its GameStop’s locations as centers to collect and verify high-value items like trading cards and collectibles.
This approach could improve trust and reduce fraud, while giving eBay a physical presence that rivals like Amazon do not have. In addition, Cohen expects to cut billions in annual costs from eBay within the first year, mainly by reducing marketing expenses.
What Lies Ahead for GME
If eBay’s board rejects the proposal, Cohen has said he is ready to take it directly to shareholders through a proxy fight. However, the deal could face challenges.
GameStop is valued at around $12 billion, much smaller than eBay, which means it would need significant financing and external support to complete a deal of this size. Even with about $9 billion in cash, GameStop would need significant debt, stock issuance, or outside funding to bridge the gap. There is also execution risk, as managing and integrating a much larger business like eBay could be difficult for a smaller company.
If successful, Cohen plans to lead the combined company and tie his compensation to performance rather than a salary.
AI Analyst Is Cautious on GME Stock
TipRanks’ AI Analyst maintained a Neutral rating on the stock with a price target of $23.50 per share. The price target suggests about 11.42% downside from current levels.
According to TipRanks’ A.I. Stock Analysis, GameStop stock scores 54 out of 100. The model highlights “improving profitability, stronger cash flow, and a healthier balance sheet” as positives, but weak technical trends and valuation concerns keep the outlook cautious.
