GameStop disclosed in a Friday SEC filing that it now owns 43.4 million shares of eBay, or roughly 9.8% of the e-commerce company’s outstanding stock. The filing lands nearly three months after eBay’s board rejected GameStop’s unsolicited $56 billion offer to buy the company outright, and it makes clear that CEO Ryan Cohen has no intention of walking away.
The stake has grown quickly. In early May, Cohen told eBay’s board chairman that GameStop had built a 5% economic position through derivatives. By June, GameStop had purchased 3.5 million eBay shares directly for about $381 million in cash. On Friday, it settled roughly 39 million shares from put/call pairs, converting what had been pure economic exposure into shares with full voting rights. The combined position, valued at close to $4.9 billion at eBay’s Friday close, sits just below the 10% threshold that would trigger additional disclosure requirements in the US.
The underlying bid hasn’t changed. In May, GameStop offered $125 per share in cash and stock for all of eBay, a deal eBay’s board dismissed as neither credible nor attractive. Cohen has argued that combining the two companies would create a stronger rival to Amazon, and in a recent Bloomberg interview floated the idea of a combined business eventually worth $1 trillion. He’s also put $500 million of his own money behind the proposal and secured a non-binding commitment from TD Securities for up to $20 billion in debt financing, contingent on the merged entity receiving an investment-grade credit rating. GameStop shareholders approved a bump in the company’s authorized share count last month, giving Cohen more room to finance a deal partly through equity if a cash-and-debt structure isn’t enough.
Asked whether he’d raise the offer, Cohen said he wouldn’t negotiate against himself. Building a near-10% stake instead lets him apply pressure without immediately sweetening the bid, and it gives GameStop real voting power at eBay’s next shareholder meeting regardless of how the takeover conversation goes.
The scale mismatch remains the central question hanging over the whole effort. eBay is roughly five times GameStop’s size by most measures, and GameStop’s balance sheet, while unusually strong for a company its size, is built largely on retail cash flow and a hoard of cash, securities, and digital assets rather than the kind of steady enterprise cash generation typically used to underwrite a deal this large. eBay posted $3.1 billion in first-quarter revenue this year on $22.2 billion in gross merchandise volume across more than 190 markets. GameStop’s first quarter, by contrast, produced $835.3 million in net sales and $389.6 million in net income, with $9.7 billion in cash, securities, and digital assets on hand.
None of that necessarily kills the deal. Activist campaigns built on a large minority stake rather than outright control have forced bigger changes at bigger companies before, and a near-10% position with full voting rights gives Cohen leverage eBay’s board can’t simply ignore. But it does mean the path forward likely runs through board pressure and shareholder votes rather than a straightforward acquisition, at least until GameStop’s financing picture firms up beyond a non-binding letter from one bank.
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