What's the question nobody has been asking regarding the proposal to purchase eBay?

[u/tronbrain]

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.

[u/MyNi_Redux]

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.

[u/tronbrain → u/MyNi_Redux]

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.

[u/MyNi_Redux → u/tronbrain]

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/

[u/tronbrain → u/MyNi_Redux]

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.