The Company Reddit Saved From Bankruptcy Is Now Trying to Buy eBay for $56 Billion
In January 2021, GameStop was a dying video game retailer with 5,000 stores slowly closing. Reddit traders saved it from bankruptcy in one of the most chaotic moments in stock market history.
This weekend, that same company made a $56 billion bid to buy eBay.
That sentence is not a joke. Here’s the full story.
What Actually Happened
GameStop is proposing to buy eBay for about $56 billion in cash and stock — a bold attempt by CEO Ryan Cohen to take over a storied e-commerce name several times larger than GameStop itself. The offer is $125 per share, roughly a 20% premium to eBay’s Friday close.
GameStop had a market value of $11.8 billion before the news broke. eBay’s market cap is around $46 billion. A company worth $12 billion is trying to buy a company worth $46 billion for $56 billion. The maths on that requires some explaining.
GameStop has secured a $20 billion financing letter from TD Bank. The remainder would come from its approximately $9.4 billion cash pile, along with the possibility of issuing additional shares. Cohen has also reportedly approached Middle East sovereign wealth funds for additional financing.
Who Is Ryan Cohen and Why Does He Think He Can Pull This Off
Ryan Cohen is 38 years old. He built Chewy — the online pet supplies company — from nothing to a $3.5 billion sale to PetSmart in 2017. He then bought a 13% stake in GameStop in 2020, joined the board in 2021, and became CEO. Under his leadership, GameStop went from losing $381 million a year to generating $418 million in profit.
Cohen told the Wall Street Journal: “There is nobody who is more qualified, based on my experience, to run the eBay business. eBay should be worth — and will be worth — a lot more money. I’m thinking about turning eBay into something worth hundreds of billions of dollars.”
He also said earlier this year, with characteristic bluntness: “It’s ultimately either going to be genius or totally, totally foolish.”
The Strategic Logic — Does It Actually Make Sense?
Here’s the part that’s more coherent than it sounds.
GameStop has around 1,600 US store locations. Cohen’s argument is that those stores give eBay a national network for authentication, intake, fulfilment, and live commerce. His vision is to turn the combined company into what he called a “legit competitor to Amazon.”
Think about it this way. eBay is the world’s largest marketplace for second-hand and collectible goods. GameStop already sells collectibles, trading cards, and second-hand games. Their customer bases overlap significantly. GameStop’s physical stores could become drop-off and authentication points for eBay sellers. Cohen wants to add live commerce — real-time video selling — to eBay’s platform. Amazon Live already does this. eBay doesn’t.
The combined company would look to deliver $2 billion in annualised cost savings within 12 months of closing — $1.2 billion from sales and marketing, $300 million from product development, and $500 million from general and administrative costs.
Cohen himself owns about 9% of GameStop. He takes no salary or cash bonuses under his employment agreement — his entire compensation is tied to the stock price. If he hits a $100 billion market cap target, his payout is as much as $35 billion. If it doesn’t work, he gets nothing.
That’s an important detail. He is betting everything on this working.
Why the Market Is Sceptical
eBay’s stock surged nearly 10% on the news. That sounds positive. But eBay shares are still trading well below GameStop’s $125 offer price, suggesting investors are sceptical the deal will actually close.
The financing gap is the obvious problem. GameStop has $9.4 billion in cash. TD Bank committed $20 billion. That gets them to roughly $29 billion. The offer is $56 billion. There’s a $27 billion gap that requires either issuing a massive amount of new GameStop shares — which would dilute existing shareholders — or finding outside investors willing to back one of the most ambitious and unconventional acquisitions in recent memory.
On CNBC this morning, Cohen was questioned repeatedly about the financing structure and repeatedly directed viewers to GameStop’s website for details rather than explaining it directly. That’s not reassuring.
There’s also the question of whether eBay wants to be acquired. Cohen submitted a non-binding proposal. eBay’s board hasn’t responded publicly. They could simply say no.
The Bigger Picture
This story is fascinating beyond just the transaction itself. It represents something genuinely new in markets — a company that was essentially dead five years ago, revived by internet traders, run by a CEO who takes no salary, attempting a leveraged buyout of one of the original internet companies to build an Amazon competitor.
That doesn’t happen in normal markets. The fact that it’s happening at all tells you something about how much has changed in finance over the past five years.
Whether it works or not, Ryan Cohen has already done something remarkable. He took a bankrupt video game retailer, made it profitable, sat on $9.4 billion in cash, secured a $20 billion credit line, and convinced TD Bank to back a $56 billion takeover bid.
Whether eBay says yes is another question entirely.
The Bottom Line
GameStop is trying to buy eBay. The company that Reddit traders saved from bankruptcy is now attempting one of the most audacious acquisitions in e-commerce history.
The logic is more coherent than the headline suggests. The financing is more complicated than Cohen is letting on. And eBay’s board hasn’t said a word.
The next few weeks will tell us whether this is one of the boldest moves in retail history or the most expensive vanity project since WeWork.
Either way, it’s the most entertaining story in markets right now.
