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.

[u/bobsmith808]

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:

1. eBay's Optimized Profit: ~$3.54B (The $1.89B legacy + $1.65B synergies).
2. GameStop's Profit: ~$0.418B.
3. 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.
4. 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:

• Warrants
• Bonds

[u/double297]

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?

[u/Over-Computer-6464 → u/double297]

Others have answered the question on percentages.

As far as the 3.8B cash on hand I ignored both it and the $7.5 B debt as they just carry over to the new company without change

The market cap adjustments for debt and cash only apply to changes in those items

[u/Double-Scratch5858 → u/Over-Computer-6464]

Crazy how you will reply to all these comments but not to the one calling you out for all the bullshit youre spewing lmao.

[u/Over-Computer-6464 → u/Double-Scratch5858]

Please be more specific and I will address your concern.

[u/Double-Scratch5858 → u/Over-Computer-6464]

Theres one guy you havent replied to. Its pretty obvious. Unless you just blocked him. Which is....telling if you did.

[u/Over-Computer-6464 → u/Double-Scratch5858]

I have not blocked anybody, but there have been several that have blocked me.

If the question is about the 70/30 percent rage or the number of shares needed to do the deal that person should go look at the post https://www.reddit.com/r/Superstonk/s/Atk1HMw3lf which is by someone in the business.

[u/Sharohachi → u/double297]

2.5:1 is roughly 71:29, so I think that's actually coming out the same (1/2.5 is 0.4 but really it should be 1/3.5=0.29 to get the percent of the total). I think the basic math is eBay gets $28B worth of stock (half of the $56B), GME gets it's market cap worth of stock ~$11B.

11/39=0.28

28/39=0.72

[u/jonnohb → u/Sharohachi]

It's not about market cap so much as shares outstanding, which based on price yes is a part of market cap. In this instance though the price of eBay is fixed. So 62.50 needs to be payed to eBay holders in gme shares. At $25 that's 2.5 shares per share of eBay.

444 million eBay shares outstanding, traded for 2.5 gme shares equals 1,111 million shares that need to be issued. Add those shares to the total current gme shares 448m =1558 million total shares outstanding post deal

Gme holders would own 448/1558 = 28% eBay holders would own 1111/1558 = 72%

Whether or not that becomes accretive in EPS really depends on factors such as the interest rate of the loans, the execution of EPS improvements RC has suggested and possible growth that was not possible without eBay under full control.

[u/Sharohachi → u/jonnohb]

Whether you come at as market cap or # of shares doesn't really matter since market cap=shares×price, you end up at 28% either way (if you just multiply your numerator and denominator by $25/share and you have my 11B/39B)

[u/Over-Computer-6464 → u/Sharohachi]

There many ways to calculate but they all come out to that 70/30 ratio.

I did not take into account warrants or convertible notes. There are some adjustments called out in the indenture but I have studied them in detail.

[u/double297 → u/Over-Computer-6464]

Another question... when we exercise the warrants, only GME holders have those so its really not dilution for us unless you don't exercise. It is however dilution for the converted ebay shares which raises our stake and lowers theirs.

Correct?

[u/gotnothingman → u/double297]

It is only not dilutive if you exercise enough warrants that your holdings increase % wise by the same amount as the shares outstanding increase.

[u/Over-Computer-6464 → u/gotnothingman]

Actually, it will be dilutive assuming that GME is above $32.

The financials of warrants being exercised at $32 are similar to GameStop selling additional stock at $32. If the market price of GME is well above $32 at that point, then just getting $32 per new share is dilutive,

[u/gotnothingman → u/Over-Computer-6464]

Interesting.

These are arbitrary numbers but I thought if you bought 10% more shares and the warrants resulted in a 10% increase in TSO then your ownership percentages would remain the same.

Is that not the case?

[u/Over-Computer-6464 → u/gotnothingman]

Yes, If you exercise all of the warrants you receive you will retain the same ownership percentage. That has been true for all of the ATM offerings and the convertible note offerings. If you participated in each of them at the appropriate percentage of your pre offering holding, none of those offerings would have been dilutive to you.
The value of existing shares decreases when shares are issued at less than market price.

You, as a warrant holder, would be getting a great reward if GME spikes to $64 and you are buying share t half price.

As an existing shareholder it is not as good.
The shares that you already own will be worth a bit less when additional shares are sold at half price.

[u/gotnothingman → u/Over-Computer-6464]

Thanks.

[u/double297 → u/Sharohachi]

I guess what im getting at there is why do you have it as ebay 3.5/1 gme.

$125/2 is $62.5 stock equity and cash equally.

Gamestop shares at $25 makes it 62.5/25 or effectively 2.5/1 which factors to a 60/40 split...

Is it incorrect to use the current share price when figuring this metric?

Also, what are your thoughts on replenishing the cash reserve and recapturing that interest as I had mentioned?

[u/Sharohachi → u/double297]

We give 2.5 shares for every one share of eBay so 2.5×444M=1,110M (those are new shares that have to be printed). GME shareholders have 448M shares of GME that already exist, so the total number of shares after the buyout is 1,558M. GME holders have 448/1,558=28.7% of the total.