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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

#681

Post by hdndjsbbs »

59percentmore wrote: post #118
hdndjsbbs wrote: post #72

Earlier quoted context omitted.

It's the leveraged buyout playbook. You buy a company and use its own assets to secure a loan. Then you "find efficiencies" (strip it for parts to pay yourself and the creditors).

In this case, if the deal goes through at the price given, eBay's liquid assets are untouched. The cash portion is paid out entirely through the loan and Gamestop's cash.

Yes, the loan is the leverage. It's secured against the assets of eBay. If the acquisition fails to produce efficiencies the resulting company has a bunch of extra, arguably unnecessary debt from the acquisition that a free-standing eBay wouldn't have.

Re: GameStop makes $55.5B takeover offer for eBay

#682

Post by Forgeties79 »

solumunus wrote: post #680
Forgeties79 wrote: post #441

Earlier quoted context omitted.

As of a few months ago yes he does not take a salary anymore and he has actual skin in the game that could pay off in the tens of billions. Taking $0 is unusual but not unheard of (Musk I think does this too) and it’s very common for CEO’s to make $1mill (or even less) and have like…80%+ of their compensation tied to performance metrics/stock options. There are a lot of caveats to saying “he takes no salary.” It soun…

It's not "as of a few months ago", he has never taken a salary as GameStop CEO.

You’re right I must’ve read incorrectly when I was looking this up.

Either way the rest still stands, it didn’t hinge on how long he’d been taking a salary or not.

Re: GameStop makes $55.5B takeover offer for eBay

#683

Post by fineIllregister »

SV_BubbleTime wrote: post #500
turtlesdown11 wrote: post #461

Earlier quoted context omitted.

Perhaps a simple analogy would work here - you made $86,000 in 2016, and had a $6,000 surplus that represents your profit. In 2020 you made $50,000 and spent $5,0000 of your savings to stay afloat. You shrink your lifestyle. Now in 2025, you make $35,000 a year, and have a $2,000 surplus. There are no prospects for more income and you expect to earn $32,500 next year, and maybe $30,000 the year after. Would you consi…

Again, facts, they have 9 billion in cash. How many companies have that on hand?

Looks like 64 companies do:

https://www.financecharts.com/screener/most-cash-country-us

You can see from the right hand column that many of those companies have delivered returns over the last twelve months, unlike GameStop. Also it appears many companies that don't have $9 billion are generating returns as well.

Re: GameStop makes $55.5B takeover offer for eBay

#684

Post by 59percentmore »

Forgeties79 wrote: post #624
59percentmore wrote: post #613

Earlier quoted context omitted.

Why wouldn't they? Before he showed up, Gamestop had years of negative earnings per share. They haven't had a negative EPS quarter in almost 2 years, now. That seems like a serious turnaround.

You’re omitting the fact that they’ve had declining revenue YoY 4 years now, with no sign this won’t be year 5. Their liquidity is primarily the result of leveraged debt and sold off shares. They have had to seriously downsize, including shuttering tons of brick and mortars. You’re picking one single metric that’s not even consistent for 2 years to assess the health of the company. It feels rather cherry-picked. The…

Seasonally-adjusted EPS has been a consistent stair-step up for 2 years. Declining revenue does not matter; they're squeezing more profit out of the revenue that's left than they were out of the gobs of revenue they had before. That's just what a good business does.

>You’re picking one single metric It's THE metric. And you are, too (a single metric, but not THE metric).

>The whole story is very rough for them right now, they’re in trouble.

Trumpian logic and speech pattern. Which speaks to its lack of veracity.

Re: GameStop makes $55.5B takeover offer for eBay

#685

Post by 59percentmore »

flyingcircus3 wrote: post #667
59percentmore wrote: post #519

Earlier quoted context omitted.

Eh. The capital was provided by various share offerings and, most recently, a bond sale, which retail probably and definitely did not buy, respectively. But here's the fun part. All of those issuances were made during periods of weirdly high prices. The biggest one was this time 2 years ago. The price jumped to $80. Doesn't seem like much, but there was a share split in 2022, 4:1. Between that and the offerings, buyi…

There is too much overlap with the tropes found in communities who want to believe in aliens and interdimensional beings to take the Gamestop saga seriously. So many appeals to emotion and ignorance, and the investment in a particular outcome has made the reddit groups around this topic indistinguishable from people who are ride or die Trumpers impervious to the falsification of their bad ideas. There is no longer a…

Well, yeah. It's an incredibly silly series of events. That said, I've lived through too much internet culture to confuse "seeing people drink the kool-aid" for a useful heuristic of if the cool heads who originated a notion were right. Weird ideas attract weirdos. Doubt the bunny-ears lawyers at your peril.

Re: GameStop makes $55.5B takeover offer for eBay

#686

Post by 59percentmore »

SwellJoe wrote: post #636
59percentmore wrote: post #622

Earlier quoted context omitted.

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?

Shrinking. Which is smart, if you see a recession on the horizon or in-progress. If profit is increasing anyway? Well, that's either a miracle or someone who really knows what they're doing. You understand that profit is supposed to go DOWN when revenue declines, right? Which is bad. But Gamestop is doing the opposite. Which is...?

Re: GameStop makes $55.5B takeover offer for eBay

#687

Post by 59percentmore »

arcticbull wrote: post #628
59percentmore wrote: post #596

Earlier quoted context omitted.

And yet... https://tradingeconomics.com/gme:us:eps (Macrotrends has it, too.) What's more important, revenue or profit?

Look at the 10Y. Still crap. No matter how you look at it this company is a dog.

I am? Last reported quarter was their 10Y high. The Q4 before that is in the top 5. And it's been positive for almost 2 years, whereas before, it had been negative for several.

>No matter how you look at it this company is a dog.

Yeah, Krypto. It's flying.

Re: GameStop makes $55.5B takeover offer for eBay

#688

Post by 59percentmore »

hdndjsbbs wrote: post #681
59percentmore wrote: post #118

Earlier quoted context omitted.

In this case, if the deal goes through at the price given, eBay's liquid assets are untouched. The cash portion is paid out entirely through the loan and Gamestop's cash.

Yes, the loan is the leverage. It's secured against the assets of eBay. If the acquisition fails to produce efficiencies the resulting company has a bunch of extra, arguably unnecessary debt from the acquisition that a free-standing eBay wouldn't have.

Big if.

I think you could frame the debt as lacking necessity but presenting opportunity.

Re: GameStop makes $55.5B takeover offer for eBay

#689

Post by crazygringo »

59percentmore wrote: post #686
SwellJoe wrote: post #636

Earlier quoted context omitted.

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

Shrinking. Which is smart, if you see a recession on the horizon or in-progress. If profit is increasing anyway? Well, that's either a miracle or someone who really knows what they're doing. You understand that profit is supposed to go DOWN when revenue declines, right? Which is bad. But Gamestop is doing the opposite. Which is...?

Not smart. If a recession is coming, the last thing you want is to reduce your revenue in advance. Or during! That's like saying, better to take some poison now if there's a flu going around I might catch!

And yes their profitability has gone up. Due to massive cuts. Slashing stores, slashing normal investment in stores, and laying off everyone they can.

This is what you do when your business model is completely failing -- you stop all normal investment that sustains the business for the long term, so you can make more profit in the short term. But it's not sustainable. It's what happens when you realize you're going out of business, and you want to take out as much money as you can, while you still can.

So the increased profit isn't a good sign in this case. It's precisely the opposite -- the end is near for this business model. It is indeed sinking.

And their desperate and nonsensical bid for eBay is another sign of this -- a kind of Hail Mary pass since their original business model is busted.

Re: GameStop makes $55.5B takeover offer for eBay

#690

Post by turtlesdown11 »

59percentmore wrote: post #684
Forgeties79 wrote: post #624

Earlier quoted context omitted.

You’re omitting the fact that they’ve had declining revenue YoY 4 years now, with no sign this won’t be year 5. Their liquidity is primarily the result of leveraged debt and sold off shares. They have had to seriously downsize, including shuttering tons of brick and mortars. You’re picking one single metric that’s not even consistent for 2 years to assess the health of the company. It feels rather cherry-picked. The…

Seasonally-adjusted EPS has been a consistent stair-step up for 2 years. Declining revenue does not matter; they're squeezing more profit out of the revenue that's left than they were out of the gobs of revenue they had before. That's just what a good business does. >You’re picking one single metric It's THE metric. And you are, too (a single metric, but not THE metric). >The whole story is very rough for them right…

> Declining revenue does not matter

When the revenue goes to zero, how much of that pie will be profit? The industry they're in is dying quite quickly, and there are no other revenue centers. The high margin business they had was reselling physical game media.

This is the same story as other dead physical media, CD's, DVDs, etc. It's going to continue to decline, and GME has no pipeline of future revenue. They continue to close stores and shrink.

Also, yikes https://xcancel.com/sshxbt/status/2051311101279887652

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