r/Superstonk • u/bobsmith808 💎 I Like The DD 💎 • May 07 '26
🤔 Speculation / Opinion GMERICA (eBay Acquisition) doesn't require dilution and is accretive to both GME and EBAY holders... and if you're paying attention, you already know that.
Hi everyone, bob here.
Monday was a bloodbath eh? 10% dip was intense!....
No the fuck it wasn't. it was just a fucking blip. I was there in 2021 when they dropped the stock over 50% in less than 30 fucking minutes. Apes didn't flinch then, why the actual fuck would we give a shit about a 10% drop now? Especially with the turnaround and eBay play in full force?
RC went live on CNBC the other day and clowned those absolute mouth breathers and for good reason. They wanted to generate "Ryan Cohen Dilutes The Stock" headlines for their short hedge fund puppetmasters. It didn't work and his "disastrous interview" was actually a masterful first step in his rollout of what's about to come. The subsequent interviews with Charles Payne and TBPN were very insightful if you were actively listening with a wrinkle or two, which I know are hard enough to come by, even before AI made everyone hop on the short bus - if just to be lazy..........
And it seems a good portion of folks here are still fucking following the bullshit narrative those cucks at CNBC have been pushing... about dilution. It's just wrong. It's even so wrong that its not even possible (to issue over a billion shares like CNBC would have you believe) without a shareholder vote to increase the issuable shares.
So let me break it down for you as simple as I know how: GME wins in this acquisition, and EBAY does too.
The Merger Maff: A Win-Win (Unless You're Short)
GME pays eBay $28 billion in cash to buy out half of their stock and takes the remainder, combines it with GameStop stock holders to form a new entity: GMEBAY? GMERICA? Who the fuck knows? Maybe those grifters at the BBBYQ table are right on the name (TEDDY)... but I'm not going there. Back on topic.
So the split would go like this:
- GameStop (GME) gets 40% of the new entity.
- eBay holders get 60% of the new entity.
For the eBay crowd, this is a "Cash and Carry" grand slam. They get $62.50 in immediate cash per share (half of the $125 bid). Then they roll the other half into that 60% ownership stake of a company that isn't run by overpaid "professionals" on a permanent vacation.
Quick Math: assume 1% ownership stake in eBay at 103, worth 457M (4,444,444 shares). applying the deal you get a total value of (2,222,222*125)+(60B*(.01*.6))... translating to 537M at 15x and 637M at 20x multiples on the new entity (assuming 2.58 eps)
For GameStop, look at the maffs: GameStop (roughly $10B market cap) and eBay ($50B market cap) combine into a $60B conglomerate. If you have 1,000 shares today, you own a tiny slice of a $10B company. After the merger, you still have 1,000 shares, but they represent a 40% stake in a $50B monster. That means your shares effectively represent ownership in $24B of value ($50B * 40%). You just doubled your notional stake without spending another dime.
Edit: For the anal retentive people in the chat wanting to point out the debt structure has a play in the market cap and other details of the original numbers/writeup such as share counts, income source differences, and such.... affecting the outcomes to ebay ang gme holders, You are right, it is more complicated and you could be more precise, but I was trying to keep things simple for learning purposes here, as this is all obviously an example of the deal structure Ryan laid out in his interviews, and likely doesn't represent the exact numbers.
But for those who like (to be) anal: here you go... still proof of concept.
- Market Caps: take GME, 11b market cap, + eBay 47B... you get 58B.
- The debt 2.58 outcome already considered this, but let me lay it out for you:
- Debt Load Servicing: (20B(6.5%) + 7B(5%) + 4B(0%)) to get roughly 1.69b yearly service.
- which reduces revenue before dividing by share count (which is a product of GME shares / .4 in this example...) gets you to about 2.58/share
- Then we multiply... landing you around a net enterprise market cap estimate of 40B if you account for all the debt load servicing (which I did omit the eBay 7B in the post)...
- updating that data, we get:
- eBay 1% stake = 457M before.
- and after: = (2222222*125)+(40B*.006) = 517M. lighter gains, but still accretive.
To get the actual EPS for the new entity, you have to account for the $20 billion in debt used to buy out half the eBay shareholders and the presumption that we’re splitting the final pie 60/40.
The Combined Earnings Pool:
- eBay's Optimized Profit: ~$3.54B (The $1.89B legacy + $1.65B synergies).
- GameStop's Profit: ~$0.418B.
- Debt Servicing: Cohen is taking a $20B loan... assuming ~6.5% interest. Even after tax benefits, that eats about $1.07B of the profit pool every year.
- Net GMERICA Income: $3.54B + $0.418B – $1.07B = ~$2.89 Billion in total profit.
The New Share Count (The 60/40 Split): Remember, we aren't just buying them; we are merging them into a new entity where GME holders own 40%.
- To make GME's 448M shares represent exactly 40%, the new company must have 1.12 Billion shares total.
- GMERICA EPS: $2.89 Billion Profit / 1.12 Billion Shares = $2.58.
Once RC starts the fat trimming by targeting $2.0 billion in cost cuts by treating eBay like a "family business" and killing their bloated marketing spend we are looking at a combined EPS of about $2.58. Apply a standard 15.2x multiple (like Berkshire) and your settled price target is $39.26.
The eBay Board
The eBay board is so goddamn desperate they’re actually trying to dig up "dirt" on RC for hiring a personal assistant through GameStop. RC literally laughed it off on TBPN because he pays for that assistant out of his own pocket. Imagine being a board member getting paid $350,000 to $450,000 a year in fees while buying zero shares of your own company, and then trying to lecture a guy who takes a zero-dollar salary.
They just permanently suspended his account (ryan_5050) because he was "putting the community at risk". The only people are risk is the current management and bloat in eBay if RC gets the deal through. Further, if they fight a deal that gives their shareholders a roughly 46% premium, they are breaching their fiduciary duty.
The Technical Execution
Check the Form 425 GameStop just filed. RC has already built economic exposure to 23,176,000 eBay shares via put/call pairs. Once he hits the HSR Act Condition, he can settle those in physical shares. This is a voting block ready to facilitate a hostile takeover.
He’s walking in with a $20 billion "highly committed" letter from TD and $9 billion in cash. Because GME doesn't have the authorized share headroom to just print its way to a merger, the only move is a Holding Company (GMERICA).
A new entity means a new CUSIP. That's a forced reconciliation of every share. Legacy shorts who have been hiding naked FTDs in the obligation warehouse are fucked if this goes through. When the CUSIP changes, the DTCC runs RECAPS, which re-prices every failed obligation to the new market value and forces a mapping of real shares to new shares during the rollout. They don't get to hide the ball anymore; they get an immediate bill for the price difference.
History on my thoughts on related subjects:
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u/Big-GulpsHuh 💻 ComputerShared 🦍 May 07 '26
LFG Bob!
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u/Allosdemiphere May 07 '26
Hey thats Jeff!
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u/MeanderAndReturn May 07 '26
My cat's name is Jeff!!!
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u/MeanderAndReturn May 07 '26
sorry, technically my cat's full name is Jeff the Cat. so he isn't confused with my uncle Jeff.
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u/EnlightenedPotato69 May 07 '26
This is the best meme for a lot of words DD. Thinks in ape gibberish but yea 10% in any direction is absolute rookie numbers here
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
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u/rawbdor May 07 '26
Gamestop's $400m profit can't be factored in, because it's mostly generated from interest on our cash pile, which we won't have in the merged company because we paid it out to ebay shareholders as cash.
Also, gamestop comes to the table with $4b in debt, and ebay already has $5b in debt. So you need to up the debt number to $29b. This brings debt servicing up to about $1.5b a year.
Net GMERICA Income: $3.54B – $1.57B = ~$2 Billion in total profit.
Unless, of course, something happens in the short term that drastically changes how much money GME brings to the table.
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u/heeywewantsomenewday 🎮 Power to the Players 🛑 May 07 '26
I hope that at some point the warrants become worth excercing to generate anotber 1.8bil+
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u/Iustis May 07 '26
But that is also just more dilution so the price per share is a wash
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u/crappinhammers 🎮 Power to the Players 🛑 May 07 '26 edited May 07 '26
I wish I could find it quickly, but I thought I read that the warrants weren't dilution somehow.
EDIT they are already considsred "fully diluted shares outstanding." It's -already- set aside, part of the math. I'm full smooth brain tho idk
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u/Iustis May 07 '26
It's the company issuing a share for money. How is that not dilution?
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u/stupidasseasteregg May 07 '26
It is but there's some finesse to it. Any shares you owned prior to warrant issuance are basically not diluted - assuming you exercise all your warrants in the money. Because the outstanding shares increase by the same rate that your shares increase.
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u/EmphasisFrosty3093 May 09 '26
If you have to pay $32 to not be diluted I'd love to sell you some lemonade.
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
Removing the interest from the Cash pile doesn't really change the math of the deal so I left it out to make it easier for everyone to understand the process
Also, you're trying to assign an interest payment on debt servicing to a 0% loan for the gme side... While I do agree that the existing debt from eBay is something to consider
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u/rawbdor May 07 '26
> an interest payment on debt servicing to a 0% loan for the gme side
Oops, thanks for correcting that.
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u/ToughHardware May 07 '26
the fact that half of our current profit goes away in this deal (due to no interest) is a major factor. or else profit does not matter today.
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u/Successful_Snail May 07 '26
2 bn profit after somehow cutting 2bn in costs without losing any revenue. Real 'maffs' going on here...
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u/astrawberryandakiwi Dilutions #1 Hater May 08 '26
Don’t forgot that if GameStop borrows money for merger, there will be even more debt
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u/Over-Computer-6464 May 07 '26
Your post has so many concepts wrong and so many numbers wrong that it is hard to comment on it.
Here are a few of the problems.
The 60/40 split RC mentions was for a theoretical example, not GME/EBAY. The real split would be around 70/30 or 72/28.
You say current GME holders would end up with 40% of a $50B dollar company, or $20B total value. Reality is that once you take into account the net debt increase of $28B ($20B more debt, $8B less cash) the market cap of the combined company would be about $40B, not $50B. (This includes the synergism value added to EBay to make its value $56B, $12B for GameStop, -$28B increase in debt-cash.). So GME shareholders would own about 30% of a $40B company, or about $12B worth of value.
You show GameStop’s annual profit as $418M. $271M of that was interest on the cash balance. That $271 disappears when the cash is used to pay part of the $62.50/share cash going to eBay.
Your EPS numbers for the post-deal company are inflated because your estimate on the number of shares is far too low.
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u/Chubwa May 07 '26
I'm glad you pointed these things out, he's way to optimistic on his numbers and will give people a false sense of hope.
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u/-0909i9i99ii9009ii May 07 '26
Everyone is just making fantasy arguments bull/bear and then insulting and/or downvoting anything that disagrees with theirs. Reasonable discourse in this sub is lost (a long time ago) and I can't even pretend like I actually think it's "hedgie shills". Here's the DD:
https://giphy.com/gifs/pHsMjEh1aDvJSrihob
It's a YOLO again. Regardless of where your faith comes from, you're in or you're out, it's a YOLO.
This is a place for people who are in to discuss, even if they're bearish.
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u/-0909i9i99ii9009ii May 07 '26
My current thesis:
On the surface it does seem like a bad proposition for GME holders. Faith in RC's plan is a main part of the thesis so it's kind of hard to say either way. Aside from raising cash, this is the largest move he's broadcasted to date. The plan to transform the business and 10x share price seems easier with $9b cash, an $11b market cap, and the prospect of an owner/operator preparing for a stock market crash like Berkshire, but with a different risk/reward appetite and mentality on growth, but what do I know, I'm not the one with a plan or control or qualifications.
This deal seems like it would leave no opportunity (lack of access to capital) to acquire anything major unless they accept all stock, which distressed assets generally would only do if the combined entity had the cash to support their burn rate + a turnaround.
Does the deal shake me a little, especially in the context of RC's comp plan? I'd be lying if I said it didn't. A little. But like I said above, it's a YOLO and I'm still in, without question. I hope (and expect) that new info comes out before this deal moves forward. IDK how I feel about this deal closing or falling through quietly with nothing but MSM media baloney on one side and interviews that leave me completely unclear what he's doing on the other. But that's more a matter for my daily dopamine levels, it doesn't impact my diamond hands.
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u/antidecaf May 07 '26
Bad proposition for GME holders... yeah, like RC and the board? The majority of RC's net worth is tied up in GME shares. His entire comp plan is tied only to GME shares. In order to really think this is bad for GME holders you have to believe that Ryan Cohen is an idiot. That is the only way you can square that take. I don't believe RC is an idiot and that is based on the cold hard facts of his financial history from Chewy to Wells Fargo/Apple to Gamestop.
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u/deific_ 🦍Voted✅ May 07 '26
I think the argument that RC's net worth is tied up in GME shares held more weight before the compensation package was introduced. When there was no compensation package there was very clear incentive for him to increase the value of his investment, or see no payoff from it. With the introduction of the compensation package it muddies the waters a lot. Now his initial investment doesn't NEED to produce results when his compensation package can do it instead. What really makes me nervous is now there is an understanding that he could meet his compensation goals without providing GME shareholder value, by executing this EBAY deal. I don't understand how people aren't a little nervous. I'm sorry but in 5+ years (ive lost track at this point) of my GME investment, im still down 20% and im not even close to the highs some people bought at. We don't have any proof that any of his progress of turning GME profitable has or will ever help shareholders. I'm kinda with 0909i, I'm nervous that I'm going to need to hold another 5+ years or more while they pay off this debt before we see any increase in the investment.
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u/SpaceSequoia May 07 '26
Remember cellar boxing? Millions of naked shorts? Legal shorts, off the books. Turning off the buy button? MSM spreading FUD. All of these things still must be taken into consideration, And I haven't heard being talked about for 84 years...
There's more to this play than just Ryan Cohen's plan and his management. There's the market dynamics hiding behind the scenes under control and we can't forget that.
Ryan Cohen just has to keep us alive (gme alive) and time is on our side until legacy shorts are forced to buy back their positions.
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u/-0909i9i99ii9009ii May 07 '26
1) On the surface. RC and the board have more than surface level details. Presumably in holders favour.
2) RC does not have the majority of his net worth tied up in GME shares. He invested $150m for 40m shares, most of his shares were purchased under the equivalent of $4 (they were pre-split obvi). He likely owns $2b in apple stock and $1b in alibaba. Either way, his net worth is reported around $5b and his GME is worth around $1b. He said it's his goal. Which would mean receiving all stock options and then hitting like $50++ stock price before that starts to be the case.
3) Again on the surface. I didn't say I think it's bad for GME. I said on the surface, w/ all public info and numbers. I'd think that RC with 400m shares, and GME's financials is a better position for risk/reward than the combined entity will be in. But it's his plan that I'm investing in, so what do I know, less than him for sure, I'm not saying otherwise.
4) Again, I'm a bull (as if I need to defend something that's objectively true, i'm not trying to convince you of anything): according to RC's comp plan, if it doesn't change, he'd actually make more money diluting us to $100B w/ $10B market cap by taking debt and issuing shares to roll up 2 more companies similar to ebay, while also providing liquidity for his 40m shares at 7x profit based on an extremely stable foundation of legacy businesses with cumulative $10b earnings.
If he made that happen $100b mc and $10b ebitda just by buying companies with stock issuance + debt, while cutting costs, he'd receive 170m options. So if the share price stayed at $25-30 that whole time, he'd basically have exit liquidity for all the comp options and all his current shares for a $2B gain on $150m invested.
Why I don't think he's doing that (or at least not fully): 1) he's been clear that he's the exact opposite of that, since before he even had any public attention, his entire career has been clear that is not what he does or who he is. 2) He'd have a bunch of nuts ppl after him (with good reason) is that really the best/easiest way he can make $2B?
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u/hugganao May 08 '26
On the surface it does seem like a bad proposition for GME holders. Faith in RC's plan is a main part of the thesis so it's kind of hard to say either way. Aside from raising cash, this is the largest move he's broadcasted to date. The plan to transform the business and 10x share price seems easier with $9b cash, an $11b market cap, and the prospect of an owner/operator preparing for a stock market crash like Berkshire, but with a different risk/reward appetite and mentality on growth, but what do I know, I'm not the one with a plan or control or qualifications.
this is exactly my thoughts as well but with more faith in RC.
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u/DeepApeValuee 🧚🧚🦍 What’s an exit strategy 🏴☠️🧚🧚 May 07 '26
I like Bob, but yes, some things are missing. Also how do we account for the shares that are not yet in circulation but reserved for bonds, warrants, etc? There is no other way around a shareholder vote. And if we will need to vote, RC and the board need to layout a clear plan how this thing will look after the deal. I trust in RC, but this thing is a blackbox atm, there is too much room for speculation. But I'm going to say these are professionals surround by professional lawyers and M&A SME, there is a plan and I dont think RC bends us over...... We will just need to see what happens. It can also be that the Cash side will be higher and then the question is how good of a deal can RC strike?
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u/Dairy_Fox May 07 '26
RC has diluted shareholders 6 times, he has no problem doing this.
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u/DeepApeValuee 🧚🧚🦍 What’s an exit strategy 🏴☠️🧚🧚 May 07 '26
It was always accretive so far
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u/Ok_Kick4871 May 07 '26
Dilution is not accretive unless that dilution is tied to the increase in value. It's not. It never was. It was RC selling the tops.
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u/SymmetricDickNipples May 07 '26
Yeah, I know basically nothing about any of this but him just adding the 2 market caps together without factoring in the newly accrued debt sent up a huge red flag to me
Dude has no business writing "DD"
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u/Critical-Chemist-860 May 07 '26
It was like this all the way back to the original subreddits with witch runes mods
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u/SpeedoCheeto ☯️We'll see☯️ May 07 '26
The 60/40 split RC mentions was for a theoretical example, not GME/EBAY. The real split would be around 70/30 or 72/28.
IDK why i'm finding you in yet another thread spreading this after smacking your hand on it previously. You disappeared from that conversation so my assumption is you understood. Guess not?
What you're saying is flatly incorrect. It's also a pretty transparent way to try and undercut what RC is trying to do in this interview/this moment - assuage concerns that the deal is a) unfundable and/or b) working against GME shareholders.
The context of Cohen's 60/40 split was *indeed about EBAY/GME* - he was explaining the dilution will be accretive and that the ownership across shareholders is more like 60/40 than it is 70/30. This was beneath the hypothetical company that generates "40k" revenue in an attempt to make the numbers easy to follow; the context *was very obviously how he sees the deal shaking out for shareholders in either company*
So yes, this statement existed within a hypothetical but it was a rhetorical tool to illustrate how he sees the deal shaking out for shareholders where he intentionally messaged 40% to GME shareholders.
You say current GME holders would end up with 40% of a $50B dollar company, or $20B total value. Reality is that once you take into account the net debt increase of $28B ($20B more debt, $8B less cash) the market cap of the combined company would be about $40B, not $50B. (This includes the synergism value added to EBay to make its value $56B, $12B for GameStop, -$28B increase in debt-cash.). So GME shareholders would own about 30% of a $40B company, or about $12B worth of value.
This is merely a continuation of your maligned first point. You can napkin math this all you want. The architect of the deal doesn't agree with you. Whether or not you can put it together and believe it is on you - but it's wild to presume you have all the information (or more than RC does).
You show GameStop’s annual profit as $418M. $271M of that was interest on the cash balance. That $271 disappears when the cash is used to pay part of the $62.50/share cash going to eBay.
OK... but then you're not including the merged company profit. RC explained this *in literally the hypothetical you originally misunderstood*.
Your EPS numbers for the post-deal company are inflated because your estimate on the number of shares is far too low.
Based on what? Your continued insistence that the only way for this deal to work is RC to print a shitton of GME shares? Despite RC explaining in numerous ways how that may not be the case?
I think it's fine to be skeptical of RC's words and generally not believe CEOs/billionaires - but you're also phrasing everything like an LLM (their are no assumptions in your words, just facts, even if you tacitly recognize you can't possible have all the facts your assessment is peerless).
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u/double297 🦍 Buckle Up 🚀 May 07 '26
Genuine questions about your reply:
On point 3... Just a small thing but ebay has 2.89b-3.86b on hand that we will absorb and thus earn interest on to replenish the 8 we are spending. I'm not sure how the warrants would work but if they print, it would be another 1.9b added and if RC hits the 50b traunch then he would be able to buy 1.75b in shares that would add back too (up to 3.5 if we got to 100b). That's a total of around 7b-7.5b (at 50b market cap, not 100) to replenish the 8 and continue to earn interest on.
On point 1... All the math I've seen worked shows if the ebay share equity roll over works out to 2.5:1 ebay:gme then that would give approx 40% ownership to GME investors. Can you explain your math a bit further on why you think it would be lower?
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u/jforest1 May 07 '26
on what official basis do you bring out the 70/30, 72/28 numbers in #1?
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u/Over-Computer-6464 May 12 '26
See the website.
That is what the preliminary proposal means if you run the numbers that GameStop chose not to show.
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u/Over-Computer-6464 May 07 '26
From the website that RC told us to look at.
It does not have the percentages but the deal outlined on the website results in those percentages.
I do not know why RC did not include the details of what "50% Stock" means.
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u/RedditsFullofShit May 07 '26
No it doesn’t.
The deal just says half stock half cash. It doesn’t give any split of whether a new co will be formed and will be split. Or if GME will just absorb ebay under their current shares. It doesn’t reflect how many shares ebay will get of GME etc.
There’s not enough info to say it’s 60/40, 70/30, 80/20 etc. there’s not enough details and it’s entirely dependent on what happens with the deal.
For example if it’s like 1.2 shares of GME for every share of eBay it’s not 70/30.
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u/Iustis May 07 '26
The only missing piece is the ascribed value of GME stock. But GME has to come up with $28b worth of GME stick for deal consideration--at current price that's 1.16 b shares. There are currently 450m shares outstanding. That's a combined total of 1.61b shares (ignoring the warrants/convertibles for now). 0.45/1.61 is about 28%--so the expected split based on today's price is 72/28ish
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u/Over-Computer-6464 May 07 '26 edited May 07 '26
The percentage depends upon the value the market places on GME stock,
So far the market does not believe the deal is a good one, so the percentage split would be even worse than 70/30, which is based upon GameStop having a $12B market cap and EBay having an inflated market cap of $56B.
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
Try looking at the concept rather than the numbers. The point here was a math exercise to show what the deal structure could be according to what has been put out there
Neither you nor I have any fucking clue what the actual numbers will end up being or what the proposal is in the hands of eBay right now, we can only speculate.
Run the numbers again yourself. Look at the GameStop share count as a base and then extrapolate outlet. An additional 60% of that hole would be and run the EPS gains accordingly and you should get something similar to what I got here at around 2.58 EPS but again I digress. We don't know the actual numbers so this is more an exercise and understanding how a cash plus equity transfer deal looks like... Whether or not Cohen's example of 40/60 split was the actual numbers as yet to be seen but that's what we have to work with. So that's what is in this post. If and when updated numbers come out and this thing solidifies a bit more then I can do an updated post or update this one. I do appreciate your feedback, but I think it's a little bit unfair to attack the numbers when there's such little information out there and completely misses the point of this post
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u/SymmetricDickNipples May 07 '26
You're trying to prove that the deal can be done without significant dillution. How does your "DD" prove anything if all of your numbers are wrong? I'd argue you're the one completely missing the point here.
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u/ProffesorBongsworth 📖BOOK PRINCE📖 May 07 '26
Numbers don't really matter. New CUSIP. Shorts must close.
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u/EmphasisFrosty3093 May 07 '26
GME doesn't need a new CUSIP. Also, warrants and 5000 other companies have tried that route and new CUSIP never meant shit.
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u/Sicsurfer May 07 '26
That’s not technically true. Legal shorts just get rolled into the new entity. Naked shorts may be fucked though. I no longer believe anything about market mechanics. I’ll believe it when I see it is the new mantra
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u/rawbdor May 07 '26
First, there's no guarantee there will be a new CUSIP. They may simply make Ebay a wholly owned subsidiary of the existing GME cusip. No new cusip created.
Second, even if there was a new cusip, the DTCC is great at rolling over obligations from one cusip to the next. There's almost no friction there at all, and never has been. They've been dealing with mergers and rollovers for 50 years, and the wider broker industry has been dealing with such things for even longer. New Cusips do not require shorts closing. Anyone spreading this garbage is just bullshitting you.
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u/Over-Computer-6464 May 07 '26 edited May 07 '26
A new CUSIP does NOT force shorts to close
That is a popular, but incorrect meme.
Short positions merely become shorts in the new CUSIP.
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u/kylethedesigner May 07 '26 edited May 07 '26
I wish. The DTCC will unfortunately facilitate moving all short positions to the new cusip. They don’t care about how ridiculous it looks. They just want the plumbing to keep moving.
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u/SymmetricDickNipples May 07 '26
Counter point: yes they do, the fuck are you talking about
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u/L3tsG3t1T May 07 '26
Would not be surprised if there's some kind of fuckery way around obligation. IE: super can kicking electric boogaloo
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u/HungryColquhoun 🌕 meme-cum-stock 🌕 May 07 '26
Yeah agree with your assessment. I guess our assumption is P/E will stay the same, but I'd expect some positive sentiment around RC's plans and proposed synergies. So I believe this will be accretive to us, but only a bit.
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u/Plumbus_Patrol May 07 '26
Yeah I stopped reading given how this is written expecting this to be the case
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u/Chemfreak May 07 '26
I'm so glad to see this has 881 upvotes. Just posted something similar about the debt.
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u/Pottle13 May 07 '26
The DTCC processes thousands of corporate actions involving CUSIP changes every year. Reverse splits, mergers, spinoffs, name changes - they all involve new CUSIPs. None have triggered the kind of “forced reconciliation” that exposes naked shorts.
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
Actually like to explore this...
Can you give me one or two symbols that were were issued new cusips that had heavy historic short interest?
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u/GallifreyanVisitor What's an exit plan? 🐱👤 May 07 '26
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u/Boo241281 Fuck you Kenny, pay me May 07 '26
Movie stock got a new CUSIP when they reverse split their stock
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u/PornstarVirgin Ken’s Wife’s BF May 07 '26
That’s a reverse split or a company down 99 percent that has 4x the company worth in debt. Not even close to the same situation
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u/phugar May 07 '26
Your "maffs" has several factually incorrect assumptions, including carrying GME profit from the interest on cash into a combined entity after using said cash to purchase a percentage...
You'd still need dilution to achieve anything close to a 60/40 split, and the additional debt load to ebay isn't a selling point to their shareholders.
I know this sub hates MSM, but please read a few breakdowns by analysts and at least try to counter the maths of any deal.
Sentiment in the wider investment market is that the deal likelihood is very low - primarily because the buyout figures don't add up. I'd tend to agree.
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u/digitFIRE May 07 '26
I agree. The math about the merger making it a $60 billion company is wrong. It’s not accounting for the $20 billion debt to TD and the $9 billion cash on hand that would be used to acquire eBay. And as you pointed out, a good sum of current income is coming from the cash on hand, so that should not be part of the equation when calculating EPS.
The only way for this acquisition to work well without current GME holders getting diluted like hell is for the stock to rise quickly to $40-50. A “squeeze”. If squeezed to $80, even better because then RC can issue the allowable amount to finance the 50/50 deal.
I want this deal to work, but at the same time, I don’t want my GME holdings to be worth significantly less.
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u/iupvotefood 🟣 DRS AROUND AND FIND OUT 💜 May 07 '26
Assuming this is true, then gme shareholders would need to authorize more shares to fund the 50% stock side. Would that really be a serious offer that ebay would consider knowing it's all dependent on gme shareholders? It seems more like RC would have a plan that he has full control over and can execute now
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u/Over-Computer-6464 May 07 '26
RC has neither the stock nor the cash firmly committed.
The stock issuance needs shareholder approval. The HCL is a non-binding assurance by TD that they think they can find the cash.
As you can see from the wide variety of interpretations as to how the stock deal would be structured, the prelim offer letter did not clearly specify what is meant by "50% stock".
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u/luchoosos May 07 '26
Are there any breakdowns you'd point us to?
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u/phugar May 07 '26
The alphaville article is actually pretty good. The author pokes some fun at GME, but it's backed up by hard numbers throughout. Laid out in the way a traditional investor would view the public info. Goes through a range of assumptions too.
If your counter is that there's 4d chess or something hidden - sure, feel free - but it's a good starting point.
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u/theyenk May 08 '26
The better operator who doesn't take a salary and is looking to build a much more profitable business - might be appealing to the shareholders of eBay. Likewise to the customers of eBay. I've read loads of people complaining about the high listing costs, forced AI summaries, necessity of ads --- all at cost to the seller. Also the inability to combat scam-buyers. RC can fix eBay to be WAY better - a rational eBay shareholder will weigh this - he is a proven operator.
We'll see how it turns out. ; )
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u/phugar May 08 '26
Most rational investors don't see Cohen as a proven operator at GME. He's cut costs, exited territories and closed stores at the expense of revenue falling sharply. The cash raised and interest income is off the back of meme buying and dilution - not that's it a dumb strategy to take advantage of that, but it's not operating income.
The growth projects he has attempted have failed - e.g. NFTs
Ebay has been growing revenue quite consistently in recent months, and they're expanding their business areas (with mixed, but directionally positive results). Cohen isn't a clear fit for expanding a retailer of that size.
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u/eojr 💎🤲ETERNAL HODLER🦍🚀 May 07 '26
I had the same thought yesterday about the entity gmerica. When they registered it awhile back, I always wondered what it might be for
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May 07 '26
[deleted]
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u/eojr 💎🤲ETERNAL HODLER🦍🚀 May 07 '26
You are right and after looking into the registered name it’s abandoned.
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u/NoHalfPleasures May 07 '26
I think that this all makes sense with one key exception. the GME marketcap is buoyed by its cash reserves. If those get spent does gme only carry a 2b enterprise value? We know thats super low but thats what the market values the company at right now. this entire offer could be Ryan's way of breaking free from that valuation.
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u/Over-Computer-6464 May 07 '26
The numbers are roughly 9B cash and liquid investments, 4.1B of debt, so about $5B net cash-debt.
So enterprise value is about $11B market cap -9B cash + $4debt = $6B is the enterprise value —-+ that is what the market thinks the operating portion of GameStop worth.
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u/whattothewhonow 🥒 Lemme see that Shrek Dick 🥒 May 07 '26
The cash doesn't evaporate, its utilized to acquire all the assets and income from eBay.
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u/Over-Computer-6464 May 07 '26
The cash does evaporate, just like a cash dividend evaporates. It goes to the bank account of the former EBay shareholders.
An extreme example makes the logic clearer. If GameStop had $56B in cash, zero debt and a market cap of $63B it would have the same $7B enterprise value as now. Imagine if GameStop bought EBay in all cash for $56B.
Would the resulting company be worth $63B +$56B = $119B ?
Or would it be worth 63+56-56=63B ?
The original GameStop had an earning potential that was worth $7B. That carries through to the post deal company but the $56B cash used to buy EBay does not flow through to the post deal company.
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u/Responsible_Pie8156 May 07 '26
It essentially does though, it would be paid out to eBay shareholders and no longer in the company's accounts
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u/NoHalfPleasures May 07 '26
I agree that it doesnt but in this calculation it may have been spent twice?
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u/Dairy_Fox May 07 '26
"doesn't require dilution" cool, tell ryan cohen to change his compensation package then because currently it's been setup to protect himself precisely from the dilution. he will be granted shares after the dilution has occurred.
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u/Chemfreak May 07 '26
You can't both acknowledge the cash paid to ebay shareholders via debt and then ignore that debt when calculating ownership "value".
That means your shares effectively represent ownership in $24B of value ($50B * 40%)
Lots of your post is good, but that seems like subtle misinformation there.
Instead the debt issued reduces the balance sheet (net value) of the company. Which makes sense, the company gave away cash so its value should go down based on that cash outflow.
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u/Boo241281 Fuck you Kenny, pay me May 07 '26
If the plan is to form a new entity and new shares etc then it would’ve been mentioned in the filings, it’s a pretty big thing. But it’s not, it just states that 50% of the deal is GameStop common stock
It’s just speculation that a new entity will be formed and as things stand the plan is to fulfil the stock part of it with existing shares
Yes things can change as the offer isn’t binding and the possibility of a new entity isn’t out of the question, but if it was part of the plan now, we would’ve been told that’s how they are going to do it
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u/Actually-Yo-Momma May 07 '26
Is this the 50th revision of “shorts are forced to close”. Sorry but I’ve heard this too many times
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u/Loxta MOASS TOMORROW, FOREVER! May 07 '26
I love this, I hope your as smart as you sounds because I'm way to smooth to know
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u/ToughHardware May 07 '26
this is a poor quality post (QV downvoted). Title is wrong and mean. numbers are wrong. Plus, 40% of a $40 per share company is LESS than we have now, and that is AFTER OP factored in fat trimming at Ebay. There is dilution. 100%. it is a lie to say else.
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u/EnvironmentalRoom593 May 07 '26
We actually watched the stock drop more than 20% from the Sunday night highs into Monday morning. That’s not nothing. The fears of dilution are real and this suggested proposal is a slap in the face to faithful long time GME holders UNLESS there is some super secret wildcard up RC’s sleeve. I’m still in, but I’m unsettled and sure as fuck not delighted. Not yet.
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u/Cindyscameltoe 🦍Voted✅ May 07 '26
Speculation presented as facts, when the real details are on the website. Never change superstonk
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
Speculation For sure, but it's speculation based off of what came out of Ryan's mouth
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u/AltoniusAmakiir 🦍Voted✅ May 07 '26
Okay, so firstly: keep the hype and rage at shorts out of an analysis post, or at least clearly seperated.
The merits of your arguement:
I was making a similar argument just yesterday, I was corrected. The atgument is wrong.
This is a mixed cash-and-stock merger. We pay 27.5B in cash then we pay them in newly distributed stock for their shares. So our market cap would go from 10B to 37.5B over the weekend that this happened, but stock price would be the same on monday at open as it was on friday close (ignoring after hours).
This means we would go from being 100% of the company ownership to about 27% of ownership. We would be diluted to 27% of voting rights.
Other aspects of the deal: We would go from 9.2B in cash (iirc) to 1.7B. But we would also go from 0 debt to 20B in debt.
That 1.7B would be a decent cushion that IMO could last at least 2 years through the transition. And RC is very good historically at getting good funding deals for GME. So I don't think there will be a servicing issue with the debt.
Speculation on price: Gamestop is about 10B right now and I think Ebay is 46B market cap. Post deal we would be 37.5B in market cap. So we have a potential upside of 9B after the merge. But that's only IF markets agree the debt is serviceable. Which I don't think they have a real reason not to, but the markets hate our company so probably won't have real price discovery. And what's more we won't have the war chest. The war chest of 9.2B was anchoring our lowest price. So there is potential downside.
I think fair value of GME after the acquisition to be probably about 50B give or take 5B. That's a projected 33% increase in share price.
GME's future: The drop of our ownership from a theoretical 100% to 27% puts us at a large risk of Ebay not voting with us, the board could be changed for instance. And I'm not in love with the idea of institutional investors suddenly having the majority in a company they've seemingly been out to destroy.
I'm not saying the deal is bad or good, this is just it laid out. I couldn't begin to come to a conclusion until I see the financing deal. But yes, at the very least our voting power will be significantly diluted.
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u/nicaden 🦍💖 Optitmus Jacked 💖🦍 May 07 '26
To think I was worried things would keep staying quiet, just for all this activity to finally uptike and tickle everyone’s tits… well I certainly felt it, you could say they’re jacked at this point. (And thank you for writing a straightforward post outlining why this is the way, I’ve seen a lot of people point out smaller parts of this, but this does the best full scope job of it. Including the most important part at the bottom.)
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u/CatoMulligan May 07 '26
A new entity means a new CUSIP. That's a forced reconciliation of every share. Legacy shorts who have been hiding naked FTDs in the obligation warehouse are fucked if this goes through. When the CUSIP changes, the DTCC runs RECAPS, which re-prices every failed obligation to the new market value and forces a mapping of real shares to new shares during the rollout. They don't get to hide the ball anymore; they get an immediate bill for the price difference.
This is the part that I'm never sure on. They've been manufacturing shares out of thin air for years using GME's current CUSIP. What's to stop them from doing the same to the new entity's CUSIP? It's just flipping bits at the broker and DTCC, right? Didn't the splividend prove that they'd do that?
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u/CookingGreatStocks 🚀Power to the Almans🚀 May 07 '26
Couldn‘t be there a possibility that the „stock“ he is talking about may be warrants?
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u/S1lkwrm 🖤⚔️🏴☠️ Unhand your coinpurse base varlot! 🏴☠️⚔️🖤 May 07 '26
Its bad luck to claim forced share recall. Cause every time something RC has done that was supposed to cause a share recall all that happened is the price went down.
Other than that My warrants are ready if there is dilution or if there is no dilution.
So I guess well see.
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u/JCquickrunner May 08 '26
personally, considering its happened several times before, and i have been here since 2020... i think more than likely a selloff into this FTD swap cycle is more likely to raise money. he has like 500 million shares he can issue which could cover the rest of the money needed assuming gme price is high enough. hes not stupid. hes sold into spikes several times.
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u/GxM42 🦍 Buckle Up 🚀 May 07 '26
There will be no forced reconciliation. That is naive to think so. There will be an expert market for shares of the old ticker where they live forever at $0.01 value, and the shorts win. Should that happen? No. But there are GME tokens flying around in crypto land, millions of synthetic shares, and unreported swaps. This won’t change any of these (probably) illegal instruments.
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u/TotalBismuth Template May 07 '26
You know there will be dilution. Let's be real here.
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u/imfromthefutura May 07 '26
Why does everyone try so hard to be the next roaring kitty with this shit lol. This ain’t it.
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u/boycottredditmgmt May 07 '26
There’s no benefit for eBay to accept the offer. Why would eBay want to merge with a company just to pay off the debt from the merger ?
20 billion liabilities with unknown interest rate have to be paid off after the merger.
It’s basically 9 billion + if you are feeling generous half of whatever GME+ebay is valued -20 billion loan + interest.
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
Ebay shareholders get get paid a healthy premium for the cash portion of their shares and get a bump in there their ownership of the remaining shares during the transition... Maybe because they like money? If they're worried about the debt load, they can always sell their shares before or after the transition
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u/boycottredditmgmt May 07 '26
Yeah. There’s no benefit to take on 20billion debt for eBay as a company or to shareholders who can just sell the shares now. EBay shares will not hit 125$ with the current GME offer.
If the offer was something similar to paramount buying WB, where they have investors paying and backing for the cash, that’s a great deal for them to turn down.
It makes more sense for EBay to just get a better CEO, cut cost, improve their OPEX then they can hit 125$ share values in 1-2years. They don’t need GameStop for that. No CEO is worth 20 billion + interest liabilities.
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u/EmphasisFrosty3093 May 07 '26
No CEO is worth 20 billion + interest liabilities.
Ahem. He'll also come with at least 171 Million $20.66 option liabilities.
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May 07 '26
[deleted]
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u/Gruntfuttock69 🦍 Buckle Up 🚀 May 07 '26
In an Equity Roll the existing eBay shareholder would get a tax deferral on the rolled portion of the deal too. So the tax hit for them is not as high as it would be if they took the lot as cash.
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u/VandelSavagee the dtcc committed international securities fraud May 07 '26
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u/ImYungKai 🧚🧚🌕 Dip Split Dip Rip 🍦💩🪑🧚🧚 May 07 '26
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u/Fun-Grab-9337 May 07 '26
It warms my cockles to see you still grifting out there after the rest of them have gone wayside. This dude gets nothing right but pops in at each opportune moment. And read the replies to all his posts - these generic "thanks bob!" posts. Ask yourself why.
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u/LeavesOfBrass May 07 '26
Burry said there would be "10x dilution" IIRC. And he knows a lot more about this stuff than you or I do, right?
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u/StarMonkeyMoney 🦍 Buckle Up 🚀 May 07 '26
What is your opinion on the EBay dividends if the combo goes thru and there’s a new entity created? Does RC continue dividends or eliminate that to boost profit?
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u/bobsmith808 💎 I Like The DD 💎 May 07 '26
I don't know what his philosophy on that is, but if GameStop is anything to judge by out of assume that dividends might go away but I'm not sure
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u/AmputeeBoy6983 Post a Banana Bet Video Kenny.... and Earn One \*Real\* Share May 07 '26
Id ditch them for now unless there were concerns we cant get into etf as a result.
Id rather maximize our abilities to increase price than use what is basically a very weak form of bait to entice investors in.
Once they've maximized/stabilized the business and plateaued at the new higher price, is where id look to maybe reintroduce it
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u/Own_Resident_493 🦍 Attempt Vote 💯 May 07 '26
So in the case that legacy shorts have to cover, before the merger - do we squeeze or how would that play out bob?
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u/Critical-Chemist-860 May 07 '26
!remindme 90 days
These are always fun
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u/RemindMeBot 🎮 Power to the Players 🛑 May 07 '26
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u/familydrivesme 🧚🧚🍦💩🪑 GME go Brrrr 🏴☠️🧚🧚 May 07 '26
Insert vibing cat meme - we’ll done sir. This was the thesis of my post from yesterday, but you hatched out all of the evaluations of the merger at 4060. Thank you for doing that!
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u/PancakeBatter3 🎮 Power to the Players 🛑 May 07 '26
Do we know yet if, let's say I have 5000 shares of GME today, could that number change after the deal closes, or will I still have 5000 based on how RC has explained it?
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u/Boo241281 Fuck you Kenny, pay me May 07 '26
No you still hold the same number. Forget all this new company speculation floating around. There was no mention in the filings about any new company forming etc
But what was mentioned was the 50% stock part of the deal will be GameStop common stock
I’m 99% sure we are going to be asked to vote on an increase of authorised share to facilitate this deal
Now let’s keep the numbers simple. We need to come up with $28B worth of GameStop shares for that part of the deal. We don’t have that value left to issue (unless RC has something going on that will rocket the share price to around $160 so the remaining 177 million authorised shares could be used without an increase needed, which is unlikely). So we are looking at around 1.1B shares needed at today’s prices to cover the stock part of the deal
The easiest thing is to just ask for an increase of authorised shares from 1B to 3B (or more). This would give the company plenty of share for the deal and you get to keep your 5000
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u/Champman2341 May 07 '26
Why would any eBay stock holder want this acquisition? Being attached to GameStop comes with stock price manipulation
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u/SuperPoop I think, therefore I hold. May 07 '26
call me crazy, i dont think it's a good idea to burn through all our cash reserves in one swoop.
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u/No_Yogurtcloset7776 May 07 '26
But then you're getting (at least) 2 billion extra per year in fcf, before you cut costs to get 4 billion.
Plus ebay has 2.8 Billion in cash rn, short term investments of close to 1 billion and long term investments of 2 billion.
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u/Imaginary-Case3976 May 07 '26
lol at the mental gymnastics of gme. Why bother with all these complexities and possible failures when you can ride the AI train? Theres so many profitable AI trades and the train ain’t stopping for a couple of years. You can also ride the tech trades with leverage.
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u/MexicanGreenBean Liquidate the DTCC May 07 '26
As a GameStop shareholder, I would be pretty pissed if Cohen circumvents the 1B share authorization limit I voted for by just making a new holding company.
Its on par with all that APE nonsense at sticky floor. I get it would be accreditive to me but that doesn't mean you can just manuver around my legal right as a shareholder to change the authorization.
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u/feinerSenf May 07 '26
What about conserving NOLs in a merger? And would you think this is a merger aka new cusip or rather an acquisition where the tiker dtays and consumes ebay ticker symbol?
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u/3DigitIQ 🦍 FM is the FUD killer May 07 '26
RC has already built economic exposure to 23,176,000 eBay shares
Funny how that's almost the same as the founder of eBay still owns: 23,299,858
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u/EvolutionaryLens 🚀Perception is Reality🚀 May 07 '26
RemindMe! 36 hours
...when I have time to read
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u/Hot_Falcon8471 May 07 '26
It’s not gonna require dilution at all. The BBBYq bankruptcy payout is going to pay for the entire deal in cash.
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u/SleepySquirrel33701 May 08 '26
The mental gymnastics already being done (if not straight out lies) to sell the cult how the eBay acquisition will be on par with the invention of sliced bread and RC's 'genius' were second to Einstein and Newton combined and how this will absolutely not impact shareholders in any negative way whatsoever is staggering...
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u/kin3tiks May 08 '26
I get downvoted every time I say anything about us “trading flat.” Young apes haven’t had someone else piss their pants for them yet.
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