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GameStop makes $55.5B takeover offer for eBay

bbc.co.uk

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Re: GameStop makes $55.5B takeover offer for eBay

#291

Post by [deleted] »

shmatt wrote: post #263
giancarlostoro wrote: post #240

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…

eBay is dying, new competitors are being created constantly, and the big ones like Poshmark are getting more North American buyers and sellers. eBay has barely grown since their post covid slump Maybe eBay survives as an international site but even at that point, with $20B in debt this will just follow the regular PE playbook of shutting down after many layoffs and pivots The entire concept of, "I have $1,000 in the…

[deleted]

Re: GameStop makes $55.5B takeover offer for eBay

#292

Post by cjbgkagh »

shmatt wrote: post #263
giancarlostoro wrote: post #240

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…

eBay is dying, new competitors are being created constantly, and the big ones like Poshmark are getting more North American buyers and sellers. eBay has barely grown since their post covid slump Maybe eBay survives as an international site but even at that point, with $20B in debt this will just follow the regular PE playbook of shutting down after many layoffs and pivots The entire concept of, "I have $1,000 in the…

As a side effect of bailing out banks they have a lower risk profile than entities that don’t get bailouts. It’s essentially an additional subsidy on top of the already generous ‘money creation’ they’re allowed to do. It’s impossible to compete against this. The riskier the bets the stronger the subsidy so of course they’ll crank risk up to 11. Since the fate of banks and pensions are tied you can’t punish the banks without also punishing pensioners and pensioners are a strong voting block. It’s a distorted economic system that can only either crash or become more distorted. Since becoming more distorted enriches the already wealthy then that’s the only option that will be taken. The only thing that can stop it is to run out of resources to spend trying to save it. Importing a large number of foreigners is a rather creative (desperate) solution. I don’t know how long this will last but I’m confident I will see a major economic calamity in my lifetime.

Re: GameStop makes $55.5B takeover offer for eBay

#293

Post by [deleted] »

shmatt wrote: post #263
giancarlostoro wrote: post #240

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…

eBay is dying, new competitors are being created constantly, and the big ones like Poshmark are getting more North American buyers and sellers. eBay has barely grown since their post covid slump Maybe eBay survives as an international site but even at that point, with $20B in debt this will just follow the regular PE playbook of shutting down after many layoffs and pivots The entire concept of, "I have $1,000 in the…

[deleted]

Re: GameStop makes $55.5B takeover offer for eBay

#294

Post by seemaze »

triceratops wrote: post #273
shmatt wrote: post #268

Earlier quoted context omitted.

Home owns are owned by people, not the home itself. If someone fails to pay a loan, their own credit score will be impacted For these PE loans, its the new company that takes on the debt, not the buyer. Essentially any broke person can "afford" any trillion dollar company this way

There are other categories of real estate loans where the debt is against the property itself. The lender evaluates the property's income and expenses when underwriting the loan.

That sounds like buying a business that owns real estate as an asset.

Re: GameStop makes $55.5B takeover offer for eBay

#295

Post by ahaferburg »

JohnFen wrote: post #283

Gamestop is one of the companies that I refuse to do business with. eBay is a company that I am reluctant about, but use anyway. If this goes through, that will be the final straw that gets me to stop using eBay entirely. That would probably be for the best.

There is no valuable information in that comment.

Re: GameStop makes $55.5B takeover offer for eBay

#296

Post by nazgulsenpai »

JohnFen wrote: post #283

Gamestop is one of the companies that I refuse to do business with. eBay is a company that I am reluctant about, but use anyway. If this goes through, that will be the final straw that gets me to stop using eBay entirely. That would probably be for the best.

Why do you refuse to do business with GameStop?

Re: GameStop makes $55.5B takeover offer for eBay

#297

Post by rahimnathwani »

giancarlostoro wrote: post #240

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…

"I think it made about a billion dollars in profit"

It raised over a billion dollars of capital (i.e. issued shares in return for cash). It did not make a billion dollars in profit (and has never had a year when it did).

Re: GameStop makes $55.5B takeover offer for eBay

#298

Post by TSiege »

taeric wrote: post #252
fasteo wrote: post #228

Earlier quoted context omitted.

>>> 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"

I mean, it is functionally the same as home loans? Would you be proposing a carve out that buying a house or car is ok this way, but nothing else?

It is a thorny question. The best way I can square the difference is that generally buying a house with debt is on the debtor and the house itself is collateral. The debtor can't pay back the loan the house is taken by the bank to be sold. Where as a PE leveraged by out the debtor is the target company. A company is different than real estate in that they are a legal entity that is now responsible to pay back a loan equal to their own value. The collateral is the business, but the business is now illiquid and has to sell of real assets and go bankrupt.

For example, Joanne's Fabrics was a profitable business with a fair amount of real estate. After PE bought them and was saddled with unreasonable debt they were in the red and had to sell all their stores. This removed useful and profitable business from the economy and sold off the assets in a fire sale. Where as me losing a house just means a bank now owns it and someone else can buy it. But if someone were to buy Joanne's they'd have to pay off the debt Joanne's owed for being bought and run into the ground

Re: GameStop makes $55.5B takeover offer for eBay

#299

Post by 3form »

weard_beard wrote: post #220
sheepscreek wrote: post #193

Earlier quoted context omitted.

Taking a $20b loan from TD Bank + sitting on $9b CASH + GameStop stock for the rest. They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Smart if they can make it work. Update: Numbers still don’t add to $55b - I think there’s a $14b shortfall. Not sure about how they are planning to fund that.

GameStop has a standing approved agreement to issue up to a billion new shares. If you read the offer you will see it is 50% financed by GameStop stock. They threw him a hardball today in his cnbc interview on this topic. $GME stock value would plummet short term, but the combined company would revalue much higher. Current Gamestop shareholders would be diluted. They would own, proportionally, a much small slice of t…

>He obviously has faith that, long term, the value of the combined company can substantially grow.

Depends how much of them he has before and he will after, it might still be worth diluting if difference is vast.

Also, why long term if short term could also do?

Re: GameStop makes $55.5B takeover offer for eBay

#300

Post by rahimnathwani »

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.

Whether the acquirer or target borrows the money, this would not allow to increase the market cap of the company. It would increase the enterprise value (because the debt allows you to make a bigger acquisition), but not the market cap.
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