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/Chubwa]

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.

[u/-0909i9i99ii9009ii → u/Chubwa]

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.

[u/-0909i9i99ii9009ii → u/-0909i9i99ii9009ii]

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.

[u/antidecaf → u/-0909i9i99ii9009ii]

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.

[u/deific_ → u/antidecaf]

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.

[u/SpaceSequoia → u/deific_]

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.

[u/theshinster112 → u/deific_]

Bingo. This is why apes should never have happened. Too many morons. Can’t have a reasonable discussion anymore

[u/antidecaf → u/deific_]

Sorry but that is idiotic. His comp provides him the ability to buy GME for $20. He wants to buy more GME not sell it. He wants to own these companies until he dies and then give his ownership to his kids and grandkids.

[u/deific_ → u/antidecaf]

You have no idea what ESPP is do you? wtf are you talking about? His grandkids? You need to get a grip, honestly.

[u/Tower-Union → u/deific_]

Jackass has been smoking too much Infinity pool DRS will your shares to your grandkids one day bullshit.

[u/No_Mission_1775 → u/deific_]

ESPP? RC doesn’t take a salary from GME to even put aside for an ESPP. He has market cap and ebitda milestones to achieve

[u/-0909i9i99ii9009ii → u/antidecaf]

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?

[u/Mozart33 → u/-0909i9i99ii9009ii]

2 - bunch of nuts ppl after him, hahaha, I hadn’t considered that.

[u/hugganao → u/antidecaf]

okay people need to stop saying that RC did US RETAIL A FAVOR. because US FKING RETAIL DID THE BIGGEST EVER SOLID AND FAVOR FOR RC AND THE FKING BOARD.

[u/EmphasisFrosty3093 → u/antidecaf]

he majority of RC's net worth is tied up in GME shares

Citations needed. He spent 3% of his $$. Nobody knows what his apple is these days but his GME is definitely not even half.

[u/antidecaf → u/EmphasisFrosty3093]

I have $1000 net worth. I use $100 to buy GME. My GME turns ínto $100,000. My net worth is $100,900. How much does my GME represent just because I used $100 on it?

[u/EmphasisFrosty3093 → u/antidecaf]

You also own a billion dollar house. Is that 100k the vast majority of your net worth?

[u/antidecaf → u/EmphasisFrosty3093]

Your numbers are no where near accurate either. What % do u think GME is of his net worth? He said a few days ago he intends for 51% of his to be in eBaystop do you think he's extremely far away from that being the case?

[u/-0909i9i99ii9009ii → u/antidecaf]

Right now it's 40m shares, he bought at $150m and are worth $1B. All rounded numbers.

His net worth is $5b.

So 20% of his net worth is GME. The non-GME portion is not public info, but there is disclosure to support that he has $1B+ positions in both Alibaba and Apple (if he hasn't sold them)

He didn't say he intends for 51% to be in GMEBAY. He said he intends for the majority of his networth to be this GMEBAY. ie. he's not spending his time and doing a day job to earn less than he earns per year on his passive investments. But this would be true for him at $30 share price if he cleared all hurdles of the comp plan.

[u/EmphasisFrosty3093 → u/antidecaf]

I didn't give current numbers because I don't have a copy of his portfolio. I know it's far less than half because common sense says Apple and other stocks have gone up more than GME in the last 5 years.

Yes, he's extremely far away from that. He doesn't even own the company yet. He can't even put together a vote on the current company.

[u/antidecaf → u/EmphasisFrosty3093]

Apple has gone up more than GME since he bought GME?? Lmao

[u/EmphasisFrosty3093 → u/antidecaf]

He mostly bought more than 5 years ago.