eBay (EBAY) shares are in focus today after the video game retail chain GameStop (GME) made an unexpected $56 billion offer to acquire the e‑commerce giant. Following the news, Truist Securities analyst Youssef Squali raised his price target to $105 from $94 while maintaining a Hold rating. Despite the major proposal, Squali said he sees little chance that the deal will actually go through.
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Here are the key reasons for Squali’s skepticism:
- Risky offer structure: The bid includes 50% cash and 50% GameStop stock mix. Since GME’s stock price has been very volatile over the past year, the analyst believes eBay shareholders might be uncomfortable accepting that much stock as part of the deal.
- Huge size mismatch: eBay is far larger and more profitable than GameStop, generating roughly 3x the revenue and 15x the net income. Its market cap is also about 4x bigger.
- Feasibility concerns: GameStop’s proposed $56 billion offer is roughly 5x its own valuation, raising doubts about whether it could realistically finance or complete the deal.
- Lack of synergies: Squali noted the companies have little strategic overlap. Any projected EPS gains would come mostly from cost cuts, not revenue growth or meaningful integration. He said this makes the proposal even harder to justify.
Even though Squali doubts the deal will go through, he believes the situation is worth watching as market conditions could shift and company strategies evolve.
Is eBay a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on EBAY stock based on 10 Buys and 14 Holds assigned in the past three months. Further, the average eBAY price target of $108.42 per share implies 1.82% downside risk.
