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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

#641

Post by Veedrac »

rahimnathwani wrote: post #297
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).

You can't normally describe it as profit because stocks by rule trade at a fair price, but it's surely reasonable to consider in this case GME making a profit from the squeeze given they were selling a good well above fair acquisition price.

Re: GameStop makes $55.5B takeover offer for eBay

#642

Post by mixologic »

sanswork wrote: post #595
trollbridge wrote: post #571

Earlier quoted context omitted.

Not growing revenue yet being profitable seems far preferable to growing revenue yet having bigger and bigger net losses. Shareholders seem to agree, as the stock went from formerly around $2.50 to present day about $92 (accounting for splits), dispute the dilution.

Tightening your belt is a good thing. No disagreement there but it has a hard limit. You can't just keep tightening the belt and growing profit, at some point you have to start revenue expansion again and from what I've seen Gamestop has no way to do that. At $2.50 they had massive amounts of debt they couldn't service and a very real chance of going out of business. Then through pure luck they became a meme and were…

The meme investors can stay irrational long before gamestop gets a growth story. If they haven't given up on their get rich quick scheme that's lasted over five years now, I really don't think they're going to jump ship now.

The sad part is that gamestop is offering 55 billion, yet only has 9 billion in cash. The only way they come up with that much capital to buy ebay is to dilute the existing shareholders to a point that "to the moon" will just be moondust.

Re: GameStop makes $55.5B takeover offer for eBay

#643

Post by ashika »

Veedrac wrote: post #641
rahimnathwani wrote: post #297

Earlier quoted context omitted.

"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).

You can't normally describe it as profit because stocks by rule trade at a fair price, but it's surely reasonable to consider in this case GME making a profit from the squeeze given they were selling a good well above fair acquisition price.

no, they issued more stock. stock is a claim on corporate equity, ie the delta between assets and liabilities. existing stock holders' claim to equity gets diluted when this happens, but share prices will often not be effected proportionally, making it appear the company has "made a billion dollars" when in fact they've just split the same pie into smaller pieces and managed to sell it at the same price. ryan now seems to think he can issue shares to acquire ebay, which will be much harder than fleecing retail.

Re: GameStop makes $55.5B takeover offer for eBay

#644

Post by toraway »

xnx wrote: post #638
nyeah wrote: post #244

Earlier quoted context omitted.

It's still an LBO, in effect borrowing against the target to get control of it.

Is that bad? No one is forcing the lenders to make that bet, and the lenders can lose money if the acquired company can't pay back the loan.

It may not be bad for the buyers, lenders, or the previous owners who all profit. But even then it could still be bad for regular people/society at large if it incentivizes anti-consumer practices by financial necessity when an otherwise healthy business suddenly has billions of dollars of debt it has to pay off ASAP. In which case it sort of looks like a simple transfer of wealth from existing customers to the organizers of the leveraged buyout with no broader societal value provided like new jobs created, R&D, etc.

Re: GameStop makes $55.5B takeover offer for eBay

#645

Post by hn_throwaway_99 »

sakopov wrote: post #551

GameStop CEO was on CNBC and acted like a total dick the entire time after they asked him how financing would work for this deal [1]. It appears that he's upset that Squawk Box previously stated that GameStop is a bankrupt meme stock. This is probably one of the funniest CNBC interviews I've seen. [1] https://youtu.be/Bmj2PaxX24E

r/wallstreetbets has been having an absolute field day with this interview, gotta admit it's pretty hilarious.

I guess wallstreetbets can giveth (given they're probably the primary reason Gamestock even still exists as an independent company today) and taketh away.

Re: GameStop makes $55.5B takeover offer for eBay

#646

Post by conductr »

chrisss395 wrote: post #633
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.

Yes...but isn't his employment contract structured to incent this kind of move? His pay is 100% at-risk in the form of 170M+ stock options that only vest if he hits some astronomical targets. I'm just not sure his rationale is completely objective given such a structure...

> I'm just not sure his rationale is completely objective given such a structure...

Which is why the board would have to approve the deal and he can’t act alone on it. He was hired to create and execute the strategy including finding the target. The real question is, why did he get hired to do something anyone could have done?

Re: GameStop makes $55.5B takeover offer for eBay

#647

Post by ericmay »

crazygringo wrote: post #630
shaftway wrote: post #599

Earlier quoted context omitted.

> Ebay commissions are not that high, 13.25% for most items. 13.25% isn't zero. > The barrier to listing [is] the amount of labor it takes to list and price everything GameStop has a surprising amount of technology around their pawnshop activities. My son traded in his laptop last month and they had him wipe it, enable developer mode, and plug it in to do automated tests and make sure they knew what they were getting…

I'm just saying, 13.25% isn't the barrier here to making this work. And shipping things to a "GameStop near you" does not cost pennies, and most people hate having to pick up packages. The reason that can be cheaper for regular stores is because they're distributing from central warehouses to those stores anyways . If GameStop is holding inventory trapped in all these physical stores, shipping an item from one store…

Interesting discussion. Something it made me think about is trading cards or other items you typically might want to sell as graded items. If you’ve got a physical GameStop with the digital eBay footprint maybe you’ve got the makings of a nice little ecosystem for selling Pokémon cards, video games, antiques, and other items in an inspected condition.

Re: GameStop makes $55.5B takeover offer for eBay

#648

Post by conductr »

acdha wrote: post #186
fontain wrote: post #83

Earlier quoted context omitted.

Cohen is already rich rich, his GameStop compensation doesn’t really matter much. The eBay acquisition could be a strategy to juice his compensation but I think it is much more likely he does believe that he can achieve his stated aims, which will financially benefit him much more in the long term.

> Cohen is already rich rich, his GameStop compensation doesn’t really matter much I think this argument is much stronger in the opposite direction: if his motivations were not focused on accumulating wealth, he’d be retired or running some kind of charity once he was that far past the point where he had to work. The fact that he’s not suggests that he derives his self-identity from wealth and the guys who do that ar…

It’s not always wealth accumulation as driver. It’s often just chasing deals and fixing companies that is fulfilling for some people. But, it’s also the thrill of the hunt and he’s effectively a big game hunter looking for a huge trophy.

Re: GameStop makes $55.5B takeover offer for eBay

#649

Post by busterarm »

andrewljohnson wrote: post #513
busterarm wrote: post #459

Earlier quoted context omitted.

That wasn't about size, it was a labor play. The NY workers were negotiating for unionization for 500 days because of unfair conditions and low pay. I would have projected the same outcome though. Quality of TCGDirect operations, from an enduser perspective, took a nosedive with the move and never recovered.

I am familiar with all the particulars, check my HN profile ;)

INDEED! Congrats on your recent successes and I really like your product!

As a seller and as a buyer.

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