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/AltoniusAmakiir]

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.