GameStop (GME) Shares Fall 8% Following Ryan Cohen’s $56 Billion eBay Proposal That Splits Market Opinion

TLDR

• GameStop CEO Ryan Cohen has submitted an unsolicited $56 billion bid to purchase eBay, priced at $125 per share.
• Following the announcement, GME shares fell approximately 8.5% on Monday, while eBay (EBAY) stock climbed about 6%.
• The acquisition proposal consists of a 50/50 cash and stock split, which could require GameStop to issue over one billion shares.
• Baird analyst Colin Sebastian has characterized the likelihood of the deal closing as relatively low.
• The $125-per-share bid marks a 20% premium over eBay’s closing price of $104.07 on Friday.

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(SeaPRwire) –   Ryan Cohen’s latest strategic move has met with a lukewarm reception on Wall Street.

GameStop (GME) shares slid roughly 8.5% on Monday after the firm announced an unsolicited, non-binding offer to acquire eBay for $56 billion, or $125 per share. By mid-morning, GME was trading at approximately $24.33. Conversely, eBay (EBAY) shares rose about 6% to surpass $110.

GameStop Corp., GME

The proposed deal is structured as an even mix of cash and GameStop equity. Cohen stated to CNBC’s Squawk Box that the company is prepared to issue new stock to facilitate the transaction.

The $125 offer represents a 20% premium over eBay’s closing price of $104.07 last Friday. It also marks a 46% premium compared to the price on February 4, the day GameStop began accumulating its position in the company.

eBay has acknowledged receipt of the proposal and indicated that its board will evaluate it. Cohen has signaled his intention to bypass the board and appeal directly to eBay shareholders should the offer be rejected.

The fact that eBay’s stock remains well below the $125 offer price suggests investor skepticism regarding the deal’s completion. GameStop currently holds a market capitalization of just under $12 billion, compared to eBay’s $46 billion.

The Financial Math Raises Flags

Executing a deal of this magnitude would force GameStop to issue more than one billion shares and incur up to $20 billion in debt. This prospect has weighed heavily on GME stock, as investors express concerns regarding potential dilution and the strain on the company’s balance sheet.

Baird analyst Colin Sebastian questions the logic behind the proposal. He contends that the primary issue is strategic direction rather than valuation, noting that the plan assumes eBay would shift from a tech-focused growth strategy toward cost-cutting—a move he suggests would only be practical if eBay hadn’t already returned to growth.

While Sebastian admits the deal appears accretive on paper, he disputes the quality of those figures. He argues that the projected gains stem from financial engineering rather than operational synergies, which could pose long-term risks to the company’s competitive standing.

He further noted that eBay’s board might implement a “poison pill” defense, adding another hurdle to the deal’s success.

Overlap and Ambition

Sebastian does acknowledge some strategic rationale for the merger. Both firms have interests in collectibles, gaming, and secondary markets, and there is potential to leverage GameStop’s retail footprint to enhance seller services.

He also views the bid as an extension of Cohen’s broader goals, potentially helping to develop higher-margin services and expand into related platforms where AI is becoming essential.

However, these potential benefits do not outweigh his concerns, leading Sebastian to conclude that the deal has a relatively low probability of succeeding.

Heading into Monday, GME had seen year-to-date gains of approximately 28-32%, while eBay had risen nearly 20% over the same period.

eBay’s board has not provided a formal response beyond confirming that they have received the proposal.