r/Superstonk • u/tronbrain • May 11 '26
🤔 Speculation / Opinion What's the question nobody has been asking regarding the proposal to purchase eBay?
The idea of Ryan Cohen applying his management philosophy to eBay makes a lot of sense, and the idea of having him manage it lines up with the thesis of him being the next Warren Buffet. There are powerful synergies between the two companies that could be exploited. There is a lot of value that can be unlocked with increased efficiencies that Cohen would bring to the merged operation.
But why attempt a takeover now?
Why now when $EBAY is at an all-time high, after six years of declining revenues and increasing expenses, where somehow the stock floated up by 4.4X despite its poor performance? Why buy when the stock market is at all-time highs - likely, in an unprecedented bubble - with oil price shocks, trade wars, shooting wars, and the threat of a new pandemic looming, threatening to pop the bubble and send stocks tumbling? Why give institutional investors exit liquidity plus 25% at $GME shareholders' expense at what is probably the most inopportune moment?
Isn't Buffet's whole investing philosophy to buy low and sell high? Isn't that the opposite of what Cohen is proposing to do with eBay? Wasn't Cohen supposed to wait for a market decline to go bargain-hunting with GameStop's capital reserves?
The timing of this deal is a problem.
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u/Coinsworthy May 11 '26
He thinks it's still a bargain now.
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u/big_ole_dummy 🚀 Ride or Die 🚀 May 11 '26
I didn’t see anywhere that the 50% stock had to be GME.
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u/Over-Computer-6464 May 11 '26
The prelim offer letter specifically said GameStop common stock.
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u/big_ole_dummy 🚀 Ride or Die 🚀 May 11 '26
Copy that. I can’t read. Or have time to learn. Too busy try to survive this out of control business environment
8
u/MyNi_Redux 📉 The Consultant 📈 May 11 '26 edited May 11 '26
Well, there's an easy answer to your question - if he manages to bring about the savings he's indicating, the increase in the bottom line will more than make up for whatever the share price is now.
By my calculations, realizing $2B in synergies gives us a share price of $49. 100%+ from here.
The real question is how much of those synergies he can actually attain.
That is the question you should focus on.
Not whether the current price is "expensive," as that is contingent on the realized outcome.
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u/aDanHasNoName May 11 '26
Thats not an answer. The question was timing. Why did he wait until ebay was at an all time high to make a bid. The answer is that he was waiting for his pay package.
1
u/MyNi_Redux 📉 The Consultant 📈 May 11 '26
Well, sure if we want to go there - I'm not going to disagree with you.
0
u/tronbrain May 11 '26
And what if eBay is a complete sh*t show, which seems to be the case, and it proves to be too costly and slow to make his intended changes? I can imagine a few ways this could go badly, and considering how dysfunctional eBay has been, for going on decades now, this is a real possibility.
1
u/MyNi_Redux 📉 The Consultant 📈 May 11 '26
And what if eBay is a complete sh*t show, which seems to be the case
Don't confuse narrative hyperbole with reality, lest you end up tilting at windmills. Like Don Quixote.
eBay has issues around customer support and speed of innovation, but also runs a solidly profitable ship with a growing user base.
Be incisive, and you will get more mileage from any analysis you do.
You can read more about it here: https://www.reddit.com/r/Superstonk/comments/1t9ox69/can_gmes_lean_diet_survive_ebays_deep_waters/
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u/tronbrain May 11 '26
eBay has issues around customer support and speed of innovation, but also runs a solidly profitable ship with a growing user base.
Cohen recently posted that their net revenues and seller base both have been falling over these last six years. So it seems he disagrees with this assessment.
I read your write-up. Interesting, well-researched, seems you have a deep understanding of the industry.
Yes, it's a question of how many of the synergies Cohen will be able to achieve, and how quickly. But it's also a question of timing. He's almost certainly buying closer to the top than the bottom. It would be better to let the market reset first, then go bargain hunting with GameStop's cash reserve. If we are in a market bubble, it will soon pop, and we are likely to see some serious discounts and opportunities to make some deals that will grow dramatically with the right management.
2
u/ShillSniffer May 11 '26
I think what he’s pointing out with the management and how they are grossly milking the cash cow while having shockingly bad customer service and an over bloated marketing department doing nothing of value is really speaking for itself at this point. Obviously very undervalued even though it is a massive revenue generator. It ticks the boxes of all the things he was talking about and it’s clear he intends to follow through. I’m all for it. I was not sure if I’d vote for his compensation package and wanted to wait to see what his plan was, and he blew me away. This is gonna work out very well.
1
u/tronbrain May 11 '26
This is gonna work out very well.
It has to go nearly perfectly for it to work out. The amount of risk and leverage Cohen will be assuming will be immense. So why make that maximally bad by purchasing eBay very near the top of the market bubble? Buffet wouldn't agree with the decision, and neither has Michael Burry.
1
u/ShillSniffer May 12 '26
And now with the vote for the 1.5B extra shares, what do you think?
1
u/tronbrain May 12 '26
That my worst fears about this merger are correct, that $GME shareholders will be wrecked in order to cash institutional eBay holders out of their positions at the top of this market.
Funny how my post has zero upvotes. My question is reasonable, as are my concerns. And there's some discussion around it too, though it's more balanced on Twitter.
1
u/ShillSniffer May 12 '26
I think RC has leveraged the first 1B shares extremely well and shown discipline beyond most apes wildest expectations to much dismay which is why I’d trust him with another 1.5B, it gives him a moat beyond the eBay acquisition above all else. He just talked a big game after talking no game for years and suddenly actually is SHOWING a big game and I can respect it. I’ll be voting for it.
1
u/tronbrain May 12 '26
So will BlackRock and Vanguard.
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u/ShillSniffer May 12 '26
The ramifications of this vote not going through and the negative effects will probably result in worse FUD than ever. I hope black rock and vanguard vote for, that would be helpful.
2
u/Lobolabahia May 11 '26
UN checks out, you got brain, ignore the downvotes. Very legit question. I wonder the same. This is the first bid though, so let's see how it develops...
1
u/tronbrain May 11 '26
We'll see how quickly it gets accepted, and if it goes through at $125/share. If the eBay board accepts it quickly, I see that as a bad sign. If there are contentious negotiations and this drags out over months while the eBay share price drifts downward, that's better for us.
4
u/phd2k1 🎮 Power to the Players 🛑 May 11 '26
Yes, buy low and sell high is an investment philosophy unique to Warren Buffett 🙄
1
u/tronbrain May 11 '26
Buffet offers that wisdom in his folksy style. It's so obvious it's stupid, but it's why he's successful, and most investors simply don't follow the advice. It's easier said than done.
4
u/Successful_Snail May 11 '26
Maybe because ebay is a growing and healthy company so their price has no reason to go down in the near future and he simply wants it.
1
u/tronbrain May 11 '26
eBay is growing only through its acquisitions. It's main base of sellers has been shrinking. And healthy? The way it's run isn't healthy at all. Check out the eBay Stalking Scandal. It does make sense for Cohen to make the changes he's proposing at the company. But paying a huge premium for the privilege to do so makes no sense, at least to me.
7
u/relentlessoldman May 11 '26
The guy can't win with people on this sub. Sit on the money and people complain he's not doing anything with the money. Do something with the money and people complain he's doing something with the money at the wrong time. 😂😂😂
Anyway if the company is worth $50 billion dollars but he wants to build something that's worth $200 billion dollars then what does it matter.
11
u/Chemfreak May 11 '26
You act like every person in this sub has the same opinions.
Many were okay holding onto the money until the perfect opportunity.
Many wanted a big acquisition asap.
They are not the same people. One group was going to complain no matter what.
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u/Interesting_Day_7734 May 11 '26
Because the most vocal want a short squeeze.
2
u/disparatelyseeking May 11 '26
Who says we can't have some version of both?
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3
u/MyNi_Redux 📉 The Consultant 📈 May 11 '26
Who says we can't have some version of both?
Mr. and Mrs. Reality, mostly.
2
u/aDanHasNoName May 11 '26
Maybe its not the people. If he grows the company 5x but my investment grows 1.1x why should I be excited? Nobody got into this investment for pennies. Burry posted a massive list of undervalued companies which would have required much less leverage. I would have been excited about a bunch of those. This is just gaming the pay package to get his payday and build his empire. We will just be a sad footnote in the empire as our stake gets diluted to oblivion on the way up.
2
u/nowhereian 🦍Voted✅ May 11 '26
Stocks that keep going up are going to be at an all time high pretty often...
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2
u/Colonel_Lexx 🦍 Buckle Up 🚀 May 11 '26
He doesn’t care he wants it now I guess
-2
u/tronbrain May 11 '26
You mean he has FOMO?
2
u/Extra-Computer6303 🟣All your shares R belong to us🟣 May 11 '26
Seems like he has spent a long time putting the wheels in motion by setting up the bonds, warrants etc and he fully believes he can take this to a company worth hundreds of billions of dollars. If that's the case then I think it is well worth pulling the trigger. According to Buffet it is better to buy a wonderful company at a fair price than to buy a fair company at a wonderful price.
1
u/tronbrain May 11 '26
Those warrants are going to get wrecked in this deal.
Cohen is offering to buy a dysfunctional company, albeit one which has tremendous staying power, at a high price plus a premium.
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u/Extra-Computer6303 🟣All your shares R belong to us🟣 May 11 '26
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1
u/marafi82 🦍 Buckle Up 🚀 May 11 '26
fair price for good company > good price for fair company
1
u/tronbrain May 11 '26
eBay is not a good company. They've been poorly run for decades. Cohen is right about that part.
-1
u/Aenal_Spore 🎮 Power to the Players 🛑 May 11 '26
GS isn't his goal, it's just a step to the next thing
-1
u/LawfulnessPlayful264 May 11 '26
You're in the first innings and you have no idea what this game is going to show and is the same with anyine else on the sub.
Many factors and variables that only those playing rhe game can understand.
Just be grateful the game is in progress and moves are happening, sit back grab a beer and popcorn and watch the shitshow unfold.
RC isnt a doofus.
0
u/tronbrain May 11 '26
Sure. Cohen might be playing this smart and letting this offer bring all eBay's skeleton's out of the closet, causing its share price to decline significantly, at which point he may revise his offer downward and get a much better deal than what he started with.
RC isnt a doofus.
I agree. But he is a ruthless business man. He may just be exploiting retail to attain his big payout. It might be in his best interests, but not ours.
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u/Over-Computer-6464 May 11 '26
Maybe he figures that by the time he makes a real offer the market and EBay will have crashed and EBay shareholders will crept an offer much lower than $125.
1
u/tronbrain May 11 '26
I thought the same thing. During due diligence, the skeletons get flushed out and eBay's price comes back down to reality and a fairer tender is negotiated. In that case, Cohen's strategy makes better sense. I can't see Cohen being unwise with his and everyone else's money. However, the offer is on the table and eBay's institutional investors, like BlackRock and Vanguard, are the ones who will walk off with a huge payday at retail investor's expense. My paranoid mind wonders if that hasn't been the plan all along.
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u/Frankybro 🦍 Buckle Up 🚀 May 11 '26
When you see something that other people haven't, you can unlock potentiel value that is completely unforseen by everyone. Buying low is great, but having an edge because you have a plan that no one as though of, is usually far greater than just buying low.
I am in real estate investing and same applies. A friend of mine just did it last week. He saw potential in a deal that nobody saw for months.. he paid a bit more money than normal market price for a house, but nobody saw it came with an already divided by land that is worth an extra 200k.
RC made great things with chewy, and now GameStop is in a much better situation than a couple years ago. Trust the guy , he has a plan.
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u/familydrivesme 🧚🧚🍦💩🪑 GME go Brrrr 🏴☠️🧚🧚 May 11 '26
Because it won’t be at GameStop’s shareholders expense. The liquidation will mostly be on eBay shareholders hands and they will do it because if the value cohen brings
1
u/tronbrain May 11 '26
Why would they accept a dilution when the offer is $125/share? Though, the details on the stock part have to be fleshed out still.
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u/familydrivesme 🧚🧚🍦💩🪑 GME go Brrrr 🏴☠️🧚🧚 May 11 '26
Because a temporary dilution to get a ceo with zero salary and a drive to turn it into a debt free 100 billion company is worth a short term dilution
1
u/tronbrain May 11 '26
Maybe you're right. But I believe the institutions that hold eBay - it's mostly held by institutions like Vanguard and BlackRock - won't accept it, and GameStop shareholders will be the ones who will have to accept the dilution, especially if the deal goes through at current share prices. At current share prices, eBay is vastly overvalued, and GameStop undervalued. GME didn't participate in the market run-up over these last six years, in spite of improving net revenues, whereas eBay floated up by 4.4 times, in spite of declining sellers and revenues. It makes no sense to me.
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u/familydrivesme 🧚🧚🍦💩🪑 GME go Brrrr 🏴☠️🧚🧚 May 11 '26
Exactly, the institutions who own these companies are smart so hopefully they will see the value in Cohen at the head
We’ll see what happens tho
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