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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

#631

Post by jonlucc »

TheGRS wrote: post #597
spaqin wrote: post #338

Earlier quoted context omitted.

Over time, eBay has become the middleman - with international shipping centres, basically escrow service with buyer protection, and rather high fees for promotion and of course, the actual sale. No middleman is something like Craigslist or FB Marketplace.

I interviewed at a place that had their own collectible card market, I think they partnered with eBay. But the whole service was that you would yield your valuable cards over to them and they would store them in a repurposed bank vault for safe keeping or to act as a seller. Cards that were like $1k or more. They seemed to be doing really well esp with all the pokemon and MTG card crazes going on.

This is part of the value prop of TCGPlayer, which was bought by eBay. They're specifically a marketplace for trading cards. Like Amazon, sellers can keep their product and sell it through the site, they can ship their inventory to TCGPlayer to manage logistics, and TCGPlayer sells cards on their own.

Re: GameStop makes $55.5B takeover offer for eBay

#632

Post by pseudosavant »

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"

I've been through an LBO before, my first thought when I saw this news was: so eBay is going to have to pay interest on a $50B loan now?

eBay had $2B of net income in the last year. That might get them half-way to paying their annual interest payment if this deal closes. Get ready for the inevitable layoffs to cover that interest payment.

Re: GameStop makes $55.5B takeover offer for eBay

#633

Post by chrisss395 »

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...

Re: GameStop makes $55.5B takeover offer for eBay

#634

Post by PierceJoy »

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 this is the opinion of someone who thinks about personal security (like many on this site) and would prefer not to use Facebook marketplace. From observing many of those around me, this is an uncommon concern. Facebook marketplace is insanely dominant, and nobody cares about inviting people to their house. They would rather invite someone to their house than have to drive to GameStop and drop off their stuff in exchange for losing money on gas, losing time, and losing a cut of the sale price.

Re: GameStop makes $55.5B takeover offer for eBay

#636

Post by SwellJoe »

59percentmore wrote: post #622
SwellJoe wrote: post #609

Earlier quoted context omitted.

A sinking company buying a healthy company several times larger and more profitable doesn't make sense. The eBay board and shareholders would be crazy to participate in this fantasy. GME shareholders are already known to be of questionable judgment, so whatever they do is SNAFU. So, it's not surprising GameStop would try something crazy, what's surprising is anyone is taking it seriously.

I don't know what your issue with Gamestop is, but calling it "a sinking company" is wildly inaccurate, bordering on delusion.

What would you call a company with revenue that declines every year for a decade?

Re: GameStop makes $55.5B takeover offer for eBay

#637

Post by xnx »

seizethecheese wrote: post #467
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 was curious about this, so I searched for the most authoritative study on private equity. Here’s what I got: https://journals.aom.org/doi/10.5465/AMBPP.2021.14309abstrac... This says that private equity effect on employment is neutral and efficiency is positive. So what gives?

> So what gives?

People just want someone to blame.

Re: GameStop makes $55.5B takeover offer for eBay

#638

Post by xnx »

nyeah wrote: post #244
triceratops wrote: post #237

Earlier quoted context omitted.

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

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.

Re: GameStop makes $55.5B takeover offer for eBay

#639

Post by xnx »

HillRat wrote: post #308
taeric wrote: post #252

Earlier quoted context omitted.

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?

Say you take out a mortgage, then rent the house to a series of meth dealers to extract the rent while devaluing the property, and then default: you're still personally on the hook for any post-foreclosure deficiency judgment. One issue with LBOs is that, after extracting cash and fees, PE funds have various ways to extinguish liabilities that individuals don't, both by shielding the PE fund from debts and the use of…

Why would the lenders make a loan where they lose money?

Re: GameStop makes $55.5B takeover offer for eBay

#640

Post by jamesfinlayson »

PierceJoy wrote: post #634
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 this is the opinion of someone who thinks about personal security (like many on this site) and would prefer not to use Facebook marketplace. From observing many of those around me, this is an uncommon concern. Facebook marketplace is insanely dominant, and nobody cares about inviting people to their house. They would rather invite someone to their house than have to drive to GameStop and drop off their stuff…

I've never used it myself but I've helped out a family members with Marketplace sales before - go and be their nominal "back-up" when they meet the buyer in a local car-park.
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