GameStop Acquires 9.8% Stake in eBay

GameStop has increased its ownership in eBay to 9.8 percent, according to its latest regulatory filings. The stake is worth roughly $5 billion in current eBay stock and equals about half of GameStop's total market cap. CEO Ryan Cohen included a transcript of his recent Bloomberg interview in the Friday filings and declared his intent to pursue eBay.

GameStop CEO Ryan Cohen outlines plans for eBay. Cohen told Bloomberg he aims to cut costs and lay off staff to boost profitability, mirroring changes he made at GameStop. He envisions the combined operations competing with Amazon in the reseller market for physical goods. Cohen also stated he would become CEO of the merged eBay-GameStop entity.

An eBay representative previously called the proposed deal neither credible nor attractive.

Cohen defends his strategy in Bloomberg interview. When asked about his goal, Cohen said he owns a lot of stock and has no perverse incentive. "So it’s to make the business a lot more profitable and to maximize shareholder value," he stated. Cohen added that cutting costs is short term and highlighted live commerce and building out an in-game visual marketplace as growth areas.

He pushed back on demands for a detailed business plan, noting that GameStop just reported its highest earnings in the company’s history with a fraction of the stores. "The plan is to make more money. The plan is to maximize shareholder value," Cohen said. He questioned why reporters only press GameStop for such details and refused to share proprietary plans with competitors.

Questions remain on executing a hostile takeover. The filings and interview do not explain how Cohen plans to complete a hostile takeover of eBay. GameStop's meme stock surge from the pandemic enabled it to raise cash by selling more shares. Cohen reportedly intends to leverage Reddit support to build a serious bidding position, after which Wall Street investors might provide financing.

Cohen's focus on eBay appears to be shifting GameStop away from its gaming retail roots. He recently dismissed the importance of physical games when questioned about Sony potentially ending PlayStation game discs. "It doesn’t matter," Cohen said. "Software today makes up less than 12 percent of the business, and collectibles makes up over half the business. So it’s totally and totally irrelevant."