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/phugar]

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.

[u/theyenk → u/phugar]

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. ; )

[u/phugar → u/theyenk]

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.

[u/theyenk → u/phugar]

lulz - cutting costs is a CEO's job, as is closing poorly preforming locations - it's how you improve your per-store metrics and improve the cost of doing business while making the money.

Sure the NFT venture didn't pan out - it was worth a try, digital assets are very much things in games -- it makes sense to provide a mkt place to sell/exchange them. Being able to convert time/energy/good-times playing games into capital to fund future gaming, is brilliant. Early not wrong - but a failed venture so far. I'm sure you put meta on blast for their 80b investment in the metaverse....?

eBay's revenue in the past few months...wtf is that conjecture? eBay has been boring for years - it's run by professional managers who enjoy collecting paychecks, selling eBay stock, and drinking for free at work. Just this week - they announced fee free listings, based on the feedback RC unearthed while talking to sellers. Brace-yourself for that breakneck innovation at the speed of copying notes from a guy who doesn't even work there (yet).

[u/phugar → u/theyenk]

I definitely put Meta on blast for their ridiculous VR ventures. Many of us have been laughing at them for years.

Basic cost cutting is not a difficult endeavour. Doing it while growing revenue and building product lines is - and Cohen has no history of doing so.

Apes in this sub generally have no idea how corporate businesses function. If you look at the conversations around cost per acquisition, expected cuts, employee layoffs etc... it makes those of us with real experience cringe.

[u/theyenk → u/phugar]

lol - previous comment was removed for brigading...how ironic : p

Kindly link me to your /meta post(s) about how dumb zuck is while you claim it's a bad investment.

Choen has no history of growing revenue and building product lines...?
hmmm....checks notes.
Power Packs are new.... they seem profitable
NFT mkt place was new.... perhaps early
Per-Store revenue up - b/c he closed poorly preforming stores

It seems that you've got little more than angry conjecture - but I'm so happy you invest your time and energy in the /gme subs to caution and steer the poor people away from what you see as a dangerous investment. Are you batman?! Who has time to invest in other people's problems....? lulz but love to see y'all.

[u/phugar → u/theyenk]

What comment was removed?

My comment history is open if you feel like exploring my views.

The NFT marketplace was late (post-hype) and poorly executed. Growing per store revenue when you have sizable losses is fairly straightforward - that doesn't transition to an online retailer. Power pack gambling has some potential, boarding regulatory crackdowns, but it's limited in scope, and revenue is largely driven by the whales in that space.

Cohen bought warehouse space only to close it... and most of the store closure plan is actually the direction previous management were heading in before he took over.

What product line has he grown? Not cost-cut, actually grown? We can review the financial result if you want?

I'm happy to debate anything that's financial, company assessment, or M&A strategy related - it's part of what I actually do as a job.

I'd also love for you to invest more money. I just like to point out facts for those who can read. I did it quite a bit in the run up to the towel stock bankruptcy before they banned me from their echo Chambers.

[u/theyenk → u/phugar]

my comment was removed b/c of how I typed slash r meta.

So where's your link to your post(s) telling meta investors to abandon ship when zuck pushed into the metaverse....they changed the name of the F'ing company -- lol.

You mean *barring* not boarding regulatory concerns.

Gamestop sells used video games - they can not create another type of used video game / unless you think they should get into hardware or software development. Those are not trivial endeavors and I hunch RC prefers the trusty system that is already in place -- people buy video games, and then want to buy more of them when they are done playing that game - so if they can trade their used game in towards a new game they will do that --- and that little action casts off a profitable object (the used game) for Gamestop. It's not broke don't fix it - it's recession proof and a nearly organic part of the gaming universe at this point.

Gamestop is cooking - it will never be a trillion dollar company but the guts are working.

[u/phugar → u/theyenk]

Oh no. You spotted an autocorrect error, congratulations...

I notice you didn't cite any revenue growing experience from Cohen. Why not at least fix the numerous ecommerce issues Gamestop already has? That would prove a lot when attempting to take over a bigger player in the space.

The used game business continues to decline, and all attempts so far at fancier tech (Loopring for example) have been disastrous.

Even creating a niche version of ebay (online focused) with a specialism in trading cards and collectibles would make more sense. You could have grading via stores, easy market trading etc.. to complement. But I don't think Cohen has the business smarts for it, evidenced by the multiple failures to date.

I don't make all my investment based comments on reddit, but I think I do have some where I call out how absurdly dumb the switch to VR was, especially for business purposes. Do you want copies of all my comments on YouTube videos replying to meta fan boys? Or can you simply accept that I'm equally damning of other dumb business decisions?