Everybody on Wall Street is ridiculing Ryan Cohen’s $56B eBay bid — but I’m not so sure | Latest Tech News
There’s not a single trader or refined investor I’ve spoken to who believes Ryan Cohen, the CEO of troubled video-game retailer GameStop, is actually going to buy eBay. And yet, I can’t rely this man out – and neither must you.
Yes, there are loads of causes to doubt. EBay is 5 instances GameStop’s dimension. The meme investor cult that has adopted 40-year-old Cohen doesn’t lengthen a lot past the fevered swamps of retail stock selecting.
Cohen’s latest disclosures about his bid also haven’t helped his trigger. His uneven and sometimes evasive interview on CNBC has been universally panned, including his laconic response to questions about how he plans to finance the deal.
There are loads of causes to doubt GameStop CEO Ryan Cohen’s pursuit of eBay. But don’t rely him out yet. Jack Forbes / NY Post Design
“The full details are on our website,” Cohen assured his interlocutors, even though simple math – $9 billion in money plus $20 billion in borrowed money – doesn’t get you to eBay’s market cap of $53 billion.
It was the joke of last week’s Milken Global Conference, the yearly confab of Wall Street energy gamers.
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Meanwhile, the everyday eBay shareholder has performed nicely over the past 5 years. It’s a profitable e-commerce business under current management.
So it’s no shock that eBay gave Cohen the previous Heisman this week, rejecting his offer as “neither credible nor attractive.” Most people on Wall Street – and most likely the eBay board – are concluding that he’ll make up the financing distinction by additional diluting his GameStop shareholders.
What eBay investor needs shares of a barely profitable retailer that sells videos in malls people don’t go to anymore and which, by the best way, has a enormous place in Bitcoin?
The typical eBay shareholder has performed nicely over the past 5 years. It’s a profitable e-commerce business under current management. REUTERS
Of course, all of this is more than truthful. But right here’s why I’m also skeptical of the Cohen skeptics.
GameStop is a awful business, which Cohen readily admits, but in some way he has made it work. Cohen, the founder of the profitable pet provides website Chewy, took over GME in 2023 just after the peak of the meme mania had despatched its shares hovering.
They’re now nicely off their highs, but Cohen has performed a good job operationally, shedding shops and accumulating money by diluting shareholders. That’s precisely what he’s supposed to do. Yes, its stock is still buoyed by meme mania, but its stability sheet is strong.
GameStop has a $10 billion market cap. Getty Images
Other meme shares have imploded; GME has a $10 billion market cap.
He’s also neatly trying for an exit ramp for GME, a floundering business. It’s why he made a foray into crypto and why he’s making his transfer against eBay.
Bob Sloan, the founder of S3 Partners and my companion in the Risk and Return podcast, has been around Wall Street for years. He sniffs a methodology to the alleged insanity in Cohen’s eBay bid.
“He’s in the game for something, it might not be this, but he’s in the game,” he tells me.
Cohen appears undeterred by eBay’s stiff arm and prompt he may make a hostile bid for the company on Wednesday.
Yes, it all sounds loopy – but wouldn’t it be any crazier than his buy of GameStop?
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