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GameStop makes $55.5B takeover offer for eBay

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Re: GameStop makes $55.5B takeover offer for eBay

#231

Post by Imustaskforhelp »

aykutseker wrote: post #119

2021: a Reddit short squeeze kept GameStop from going under. 2026: GameStop is bidding $55B for eBay, a company 4x its size. If it lands, this might be the strangest full circle moment public markets have ever produced.

Another interesting observation to me is not that Gamestop was able to go from this full circle moment but rather the fact that Reddit has such influence that it was able to create the conditions which led here.

If Gamestop is the king, then reddit was the king-maker.

Re: GameStop makes $55.5B takeover offer for eBay

#232

Post by SpicyLemonZest »

getnormality wrote: post #212
pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

> the should-be-illegal process of putting debt on the acquired company's balance sheet. I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

The problem is that leveraged buyouts allow me to effectively inflict that debt on other companies, making a buyout offer the existing shareholders won't be able to resist and then reorienting its operations around servicing the debt I took out. In fact, lenders arguably favor this, letting me use the company I'm acquiring as collateral to acquire more debt at better terms than would otherwise be available.

Re: GameStop makes $55.5B takeover offer for eBay

#233

Post by sgerenser »

cyanydeez wrote: post #135
vessenes wrote: post #100

Earlier quoted context omitted.

… and the stock has not dropped 39%, in fact it’s trading about where it was a year ago. Shareholders have been content to let Cohen add to the balance sheet, adjust operations and make a large move. This is one such move. And GME is up 5+% in pre trading, so shareholders are generally positive about this idea.

the shareholders of GME operate under the delusion that there's gonna be another magic short squeeze.

Waiting for the MOASS… it’s coming any day now!

Re: GameStop makes $55.5B takeover offer for eBay

#234

Post by Pikamander2 »

noitpmeder wrote: post #217
bhouston wrote: post #209

Earlier quoted context omitted.

> They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Is that really an advantage? Fulfilment is always handled by a lot of places for the big e-retailers for returns, which is similar to what eBay needs for sellers. How much does Staples charge for its Amazon return fulfillment where you don't even need to wrap up the item? It is really popular: https://www.staples.ca/a/learn/am…

My kneejerk is that most consumers these days expect delivery for items purchased online, and allowing them to pick up their items at a brick and mortar probably isn't the issue. Now, dropping off items you're selling? That probably removes a decent hurdle for many first-time/one-time users who aren't familiar with shipping (what box/label/insurance/padding/...).

Can confirm. The main reason why I don't sell stuff on eBay more is because of the high shipping costs and frequent scams.

Facebook Markerplace has issues of its own, but if you agree to meet up at a safe public location to buy/sell the item in person, then it mostly alleviates those two issues aside from the small chance of receiving counterfeit bills.

If Gamestop and eBay merge, then they could (potentially) offer a better deal to buyers/sellers by either buying certain items directly, shipping them at lower costs, or having an employee "verify" the item before it ships so that the seller receives better protections.

That's assuming that this is truly an ambitious merger rather than just being some kind of exit liquidity scam that gives Ryan Cohen a golden parachute right before he peaces out.

Re: GameStop makes $55.5B takeover offer for eBay

#235

Post by sbarre »

getnormality wrote: post #212
pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

> the should-be-illegal process of putting debt on the acquired company's balance sheet. I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

It's the problem of all the employees (and potentially customers) of the company being plundered.

They have no say in the matter, and given that the lender can probably absorb the loss without, you know, missing mortgage payments or losing health insurance, I would absolutely argue it's not just their problem.

You can certainly hold the opinion that "it's just business" but it feels like an unnecessary part of business that very often has real disruptive and detrimental effects on average working people, for the sole benefit of rich people getting richer.

And yes I get that it's not just a PE problem, but PE is a big one of these kinds of problems.

Re: GameStop makes $55.5B takeover offer for eBay

#236

Post by boringg »

consp wrote: post #224
getnormality wrote: post #212

Earlier quoted context omitted.

> the should-be-illegal process of putting debt on the acquired company's balance sheet. I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

In the modern world if you are a bank you will be bailed out eventually, thus your problem becoming everyone's problem.

Ah-hem SVB?

Re: GameStop makes $55.5B takeover offer for eBay

#237

Post by triceratops »

fasteo wrote: post #228
pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

>>> should-be-illegal process of putting debt on the acquired company's balance sheet This is a basically a leveraged buyout (LBO). All private equity works this way. Yes, it should be illegal, or at least heavily limited. I highly recommend this book: "Plunder: Private Equity’s Plan to Pillage America"

Is it still "private equity" if a public company takes a loan to buy another public company?

Re: GameStop makes $55.5B takeover offer for eBay

#238

Post by miltonlost »

getnormality wrote: post #212
pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

> the should-be-illegal process of putting debt on the acquired company's balance sheet. I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

The people who work at the bought-out company who will then be fired due to PE now gutting workforces to pay off the debt. Laborers are getting the shaft

Re: GameStop makes $55.5B takeover offer for eBay

#240

Post by giancarlostoro »

The original shorting of GameStop back in 2021 gave them a bit of a boost back into the green. While people were doing the GME to the moon, GameStop made more shares to sell, and paid off a bit of its debts, I think it made about a billion dollars in profit, they're still struggling, but it helped prolong their life.

A friend of mine also pointed out and this made it click for me that it makes 100% sense, GameStop is setup as a legal pawnshop in every state. So a pawnshop buying out eBay makes insane sense.

This merger in theory could be good for both eBay and GameStop if they don't mess it up. Imagine being able to list your eBay items locally without having to have people needing to come to your house, or better yet, getting a cut of what you wanted up front since they're basically a pawn shop, and then they list it on eBay and turn a bit of a profit with a local pickup option available.

I could see this working out decently, assuming the CEO of GameStop doesn't mess it up completely.

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