Meme M&A

GameStop Tries to Buy eBay

GameStop just entered a boss fight. The video‑game retailer has made an unsolicited $56 billion bid for eBay, a company nearly four times its size.

The offer is $125 per eBay share, split half cash, half GameStop stock. It represents a 46% premium to where eBay traded before GameStop started buying shares. GameStop already owns 5% of eBay. CEO Ryan Cohen argues the duo could be worth “hundreds of billions of dollars” together, fusing GameStop’s retail following with eBay’s global online marketplace, especially in collectibles.

Markets aren’t convinced. EBay shares rose only about 5% after the bid, trading at about $109. Shares trading well below the offer price is a classic sign of investor skepticism.

Funding Reality in the Meme Stock World

This deal would turn normal M&A logic upside down. GameStop is worth about $11 billion, 25 times more than six years ago. The stock is largely carried by an enthusiastic fanbase of retail investors.

But even with that boost, eBay is in another league. It’s worth about $49 billion. Yet, GameStop says it can fund the bid by:

• Using $9B in cash
• Raising up to $20B in new debt
• Issuing new shares to plug the gap

Taking on that much debt would be risky, and issuing new stock dilutes existing shareholders — everyone owns a smaller slice of the pie.

How Mega M&A Works

Big takeovers of public companies follow a rough playbook, even chaotic ones like this.

• Stake first (optional): Companies often buy shares quietly before bidding (GameStop built a 5% stake).
• Premium offer: Bid above market price to tempt shareholders.
• Funding proof: Line up cash, debt, or stock financing.
• Board review: The target company checks if the bid is serious and attractive. It recommends shareholders to vote “yes” or “no”.
• Go hostile (optional): Take the offer straight to shareholders if the board says no.
• Get regulatory approvals: All major M&A runs into the risk of being blocked by antitrust authorities, who are trying to protect fair competition.

The Squeeze That Changed Everything

You can’t understand this bid without 2021. That’s when GameStop became ground zero for the meme‑stock uprising.

• Hedge funds had heavily shorted GameStop — betting the stock would fall.
• Reddit’s WallStreetBets users fueled the flames, and retail investors piled in, buying shares and call options.
• GameStop shares exploded as much as 1,600% in just two weeks, turning a dying retailer into a market phenomenon.
• Short sellers were forced to buy back stock at soaring prices — a short squeeze.

That frenzy gave GameStop something rare: a massive, loyal retail investor base and the ability to raise billions by issuing new shares. Today’s eBay bid is a direct descendant of that moment.

Don Quixote’s M&A Quest

Online forums lit up immediately after the news of the deal. Some posted memes of CEO Ryan Cohen tilting at windmills. Others pitched a future “GameStop Hathaway”, with GameStop becoming a vehicle for buying other firms, like Warren Buffett’s Berkshire Hathaway.

A famed investor, Michael Burry, suggested this path for GameStop earlier this year but exited his entire position after the deal announcement, citing concerns about debt.

Retail traders are back buying both GameStop and eBay, but so far, there’s no full meme‑mania surge. Analysts are asking basic questions about cost savings and the benefits of the merger.

Meme-stock mania led by GameStop has played a role in boosting interest in investing. Retail participation in US stocks has shot up to nearly 20% of average daily trading volumes, according to BlackRock, up from low single digits before the pandemic.

But analysts think GameStop's latest venture into big boy M&A might be a step too far.