Can GameStop buy eBay?
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GameStop, the meme stock that listeners will remember was destined to go to the moon, has decided to stay on Earth instead, where it will attempt to buy a much larger company, eBay. Today on the show, can the mouse eat the lion? This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I am Rob Armstrong, coming to you from an unseasonably chilly New York City. And joining me in the studio is the head of the FT's Lex column, John Foley. Hi, John.
I'm here to announce that Lex is performing a hostile takeover of Unhedged. Oh, man.
I'm calling my lawyer. I don't think I want that.
No.
My initial temptation on hearing that GameStop, which we last heard of when it was chased to unrealistic highs by adrenaline addled retail investors, is trying to buy mighty eBay was to dismiss it as a gag that would soon go away. But you've written that maybe this is something that deserves to be taken seriously. Can you walk us through that?
Well, for full disclosure, I always like it when people in finance try and do silly things.
Yes.
Because it's interesting and I think creativity should be praised. So I was... Thinking about not dismissing this out of hand when it happened, but it is, on the face of it, completely wild, the idea that GameStop, which is about an $11 billion company, could buy eBay, which is like a $46 billion company.
Yes.
And eBay, a company that's doing really well. eBay's doing well.
What is GameStop's plan to acquire eBay?
Yeah. I will admit, also, second piece of full disclosure is that I haven't actually used eBay in about 15 years, but the share price has been rocketing. It's about 50% in a year.
I have a disclosure to make, too, which is that this pair of shoes, which I am showing to John right now... From eBay. ...are from eBay. These are a pair of wingtips. That are from back when Alden and Brooks Brothers made shoes together. This is a prized item. They're a kind of burgundy color. I got a great price.
I wonder who owned them before, though. I don't know. Do you not find yourself every day wondering who walked in those shoes? They're like a dead guy's shoes and his ghost is following me around.
Did they die in the shoes? They were stolen off a corpse after a shootout.
So, right, GameStop wants to buy eBay. It's an unsolicited offer. The CEO of GameStop is this guy called Ryan Cohen, who is a sort of like an icon in the meme stock world. But he's very, very hostile towards traditional corporate governance and big, you know, America Inc., So he's launched this – there's something very – he's kind of trolling eBay at the same time as trying to buy it. He's just gone out with it in public, said, here's what I want. If you're not interested, eBay board, I'm going to try and do it anyway by going hostile. It's fascinating.
So is it a massive PR stunt? Or do you think he means it?
Well, GameStop was once a chain of video game stores. And it still is kind of, but it's a much shrunken version of that. What it really is now is a pile of cash. So Cohen has been using the meme stockiness of it to issue convertible bonds and raise cash. So he now has about $9.5 billion of cash. And the idea is that at some point he would invest it in something that would make lots of money.
And by the way, I've often said this about... The meme stocks. Like, if the market, for reasons unknown, decides to massively overvalue your shares, for goodness sake, sell the market more of the shares. Yeah, which they did. That's exactly what they did. That is the rational thing to do. That is the best thing you can do for shareholders.
So he has this cash, right? And the idea is he'll spend it on something and he's decided that eBay is the thing.
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