On Sunday evening, May 4, GameStop announced an unsolicited, non-binding offer to acquire eBay for $55.5 billion - roughly $125 per share, split half in cash and half in GameStop stock. The video game retailer's own market capitalization - the total value the stock market places on a company - sits at around $12 billion. GameStop is trying to buy something nearly five times its size.
The offer represents a 20% premium over eBay's closing price the prior Friday. eBay's shares jumped 7% when markets opened. GameStop's dropped 10%. That gap tells you something about who the market thinks will benefit from this deal.
Ryan Cohen, GameStop's CEO, went on CNBC Monday morning to explain how a company worth $12 billion was going to buy a company worth $46 billion. He wore a leather jacket. He said the details were on the website. The interviewer, Andrew Ross Sorkin, asked how the math worked. Cohen said the details were on the website. Sorkin tried again. Cohen said he didn't understand the question.
That interview - which Patrick Boyle broke down in detail - was the first sign that this story was not, primarily, about a takeover. It was about something else entirely.
The background
eBay is one of the original internet companies. Founded in 1995, it went public in 1998, and for a brief moment around 2005 it was actually bigger than Amazon. Its early listings were dominated by Beanie Babies, which were themselves in a speculative bubble at the time. eBay, in other words, has always lived at the intersection of the internet and collective delusion about the value of small objects.
What killed eBay's dominance was not one thing but several things arriving at once. Amazon built logistics infrastructure that eBay could not match. A generation of specialized platforms - Vinted and Depop for secondhand clothes, StockX for sneakers, Reverb for instruments, The RealReal for luxury goods - each carved off one of eBay's most profitable categories and offered something eBay could not: authentication. Buyers on those platforms could trust what they were buying. eBay became, as the video puts it, a general-purpose digital car boot sale where you could buy anything but couldn't be entirely sure what you'd receive.
The company has since reinvented itself reasonably well. Under new leadership, it stopped trying to compete with Amazon and leaned back into its strength: used goods, auto parts, and collectibles. Sales grew 17% in the first quarter of 2026. It has around 135 million active buyers. Its stock is up over 130% since the start of 2024.
GameStop's trajectory has been different. The retailer became famous in 2021 when retail investors, coordinating on Reddit's WallStreetBets forum, drove the stock up roughly 1,500% in two weeks - one of the most chaotic episodes in modern market history. That episode gave rise to the term meme stock: shares whose price is driven not by the company's underlying business performance but by internet sentiment, community action, or the thrill of betting against hedge funds. The business itself - selling physical video game discs in an era when games are downloaded - has continued to decline. Revenue fell 14% in the most recent quarter. GameStop is in the process of closing nearly 500 retail locations across the United States.
What is actually happening
The offer itself is structured as half cash, half GameStop stock. According to CNBC, GameStop has $9.4 billion in cash and liquid assets on its balance sheet - though reporting from the Financial Times breaks that down into $6.3 billion in actual cash, $2.7 billion in unexplained liquid investments, and around $368 million in Bitcoin. The company also secured what is called a highly confident letter from TD Securities, the investment banking arm of TD Bank - a document indicating the bank believes it could arrange $20 billion in debt financing. The word "believes" is doing considerable work in that sentence. A highly confident letter is not a commitment. It is, legally, a bank saying it thinks it could probably do this if pressed.
According to CNBC, the letter contains a key condition: the combined company would need to maintain an investment-grade credit profile - meaning credit rating agencies would need to judge the merged entity as financially stable enough to borrow at low rates. Moody's, one of the major ratings agencies, has already described the proposed acquisition as "credit negative" for eBay, estimating that leverage - a measure of debt relative to earnings - could approach nine times for the combined company. For context, most investment-grade companies sit below three or four times. Nine times is the kind of number that makes lenders nervous.
Then there is the stock portion. To deliver $28 billion worth of GameStop shares at current prices, the company would need to issue more than a billion new shares. GameStop's corporate charter - its founding legal document - currently authorizes exactly 1 billion shares in total, with 448 million already outstanding. In other words, GameStop is proposing to pay for half of this acquisition with shares that do not currently exist and that shareholders have not yet authorized it to create.
As financial analyst Matt Levine noted in his Money Stuff column, the math of issuing that many new shares creates an odd inversion: if the deal closed, former eBay shareholders would end up owning a larger portion of the combined entity than legacy GameStop shareholders would. The transaction starts to look less like GameStop buying eBay and more like eBay accidentally absorbing GameStop, with Ryan Cohen volunteering to run the resulting company.
Cohen also claimed GameStop had built a roughly 5% stake in eBay, making it one of the company's largest shareholders - a position that would theoretically force eBay's board to take the proposal seriously. But when the FT examined GameStop's regulatory filing, it found that the company held only 25,000 actual eBay shares. The remainder of the stated 5% economic interest consisted of options and derivatives - financial contracts that bet on eBay's share price without conferring ownership or voting rights. A company's board has legal obligations to its actual shareholders, not to people holding derivative bets on the stock.
Cohen also threatened a proxy fight - a process where a shareholder campaigns to replace a company's board members by winning votes from other shareholders - if eBay's board rejected the offer. The deadline for shareholders to nominate director candidates for eBay's upcoming annual meeting had already passed.
The money trail
The business logic Cohen presented goes like this. GameStop's 1,600 physical US stores would give eBay a national network for authentication, intake, and fulfillment. Instead of mailing a vintage watch to a centralized hub, a seller could walk it into their local GameStop. The stores could double as broadcast studios for live commerce - sellers livestreaming products while buyers bid in real time, a format popular in Asia that is still nascent in the United States. Cohen also proposed cutting $2 billion in annual costs from eBay, mostly by slashing $1.2 billion from sales and marketing and $500 million from administrative expenses.
Neither argument is without merit on its face. eBay does have a problem with trust and authentication. Livestream commerce is growing. Marketing budgets can be bloated. The flaw is that GameStop is currently closing nearly 500 of those 1,600 stores, which makes "national logistics network" a difficult pitch. And cutting $1.2 billion from sales and marketing at a platform that depends on attracting buyers and sellers is the kind of move that looks good for one or two quarters and then doesn't.
But the more relevant question is why Cohen would want to do this deal at all. His compensation structure, renegotiated in January 2026, awards him stock options potentially worth up to $35 billion if GameStop reaches a market capitalization of $100 billion and hits $10 billion in cumulative EBITDA - earnings before interest, taxes, depreciation and amortization, a measure of operating profitability - within ten years. GameStop's current market cap is around $12 billion. Getting there organically, by growing a physical retail business in a world of digital downloads, is extremely difficult. Bolting on a $46 billion company and then growing modestly for a decade is considerably less so.
Cohen's options pay out based on the market cap number, not on the value per share. Issuing a billion new shares, even at a price that dilutes existing holders, still moves the total market cap higher. Whether existing GameStop shareholders benefit depends entirely on whether Cohen can run eBay better than eBay's own management - which is, at this point, an untested hypothesis backed primarily by a CNBC appearance in a leather jacket.
There is also the matter of who Cohen is courting to close the financing gap. The Wall Street Journal reported that he is considering approaching Middle Eastern sovereign wealth funds - government-owned investment pools, often funded by oil revenues, that have backed a range of ambitious and uneven ventures in recent years, including WeWork and Lucid Motors.
What people are doing about it
The reaction has split cleanly along the line between retail shareholders and professional investors - and the two groups are not reading the same story.
On Reddit's SuperStonk, the primary gathering point for GameStop retail shareholders, the response to Cohen's CNBC interview was largely positive. Comments described the performance as deliberate, a way of punishing CNBC for years of negative coverage of the stock. The theory was that a friendlier interview, later given to Fox Business, represented the real pitch. For a shareholder base that has held through years of decline on the premise that Cohen is a misunderstood visionary, this framing is coherent. It also has no bearing on whether eBay's institutional shareholders - the pension funds and asset managers who own the majority of eBay's shares and who will ultimately vote on this deal - find the financing credible.
Michael Burry, the hedge fund manager portrayed by Christian Bale in The Big Short and one of the investors who inadvertently helped spark the original 2021 GameStop frenzy, sold his entire GameStop position the day after the bid was announced. He had been one of Cohen's more credible backers, having outlined a thesis he called "Instant Berkshire" - the idea that GameStop, sitting on cash and returning to profitability, could make disciplined acquisitions and transform into something resembling Berkshire Hathaway, Warren Buffett's investment holding company. Burry's calculation was that the eBay deal would push the combined company's debt-to-EBITDA ratio to around 7.7 times - "bordering on distressed," in his words - well above the five-times threshold his thesis required.
His closing line: "Never confuse debt for creativity."
Cohen, meanwhile, attempted a publicity stunt: he began listing personal items for sale on eBay, including retro video games and a pair of Adidas socks, claiming he was raising money "to pay for eBay." eBay suspended his account.
The bottom line
This bid was never really about buying eBay. The financing doesn't exist in binding form, the shares required to close the deal haven't been authorized, and the proxy fight deadline has already passed. What the announcement did produce was a significant news cycle, a bump in attention around GameStop stock, and a step toward the market capitalization thresholds in Cohen's $35 billion compensation package - all without spending a dollar. The man who predicted the 2008 financial crisis looked at a $56 billion offer funded with a bank's confident feelings and a billion shares yet to exist, and decided to leave. When the smartest trader in the room walks out, the most useful question is not whether the deal closes. It is who benefits if it never does.
Timeline
- 1995 - eBay is founded by Pierre Omidyar
- 1998 - eBay goes public; early listings dominated by Beanie Babies during a collectibles bubble
- 2005 - eBay surpasses Amazon in market value; begins a decade of relative decline as Amazon's logistics network takes hold
- 2019 - Michael Burry takes a stake in GameStop and begins pushing for share buybacks; retail investors on Reddit take notice
- January 2021 - Ryan Cohen joins GameStop's board; Reddit traders on WallStreetBets drive the stock up roughly 1,500% in two weeks, creating the meme stock phenomenon
- August 2022 - Cohen sells his entire stake in Bed Bath and Beyond near the stock's peak; the stock subsequently collapses; the SEC opens an investigation; a class action lawsuit is filed
- September 2023 - Cohen becomes GameStop CEO, steering a return to profitability through store closures and cost cuts
- January 2026 - GameStop grants Cohen a performance-based compensation package worth up to $35 billion if the company hits $100 billion in market cap and $10 billion in cumulative EBITDA within ten years; Burry publicly discloses his GameStop stake and outlines his "Instant Berkshire" thesis
- February 4, 2026 - GameStop begins building a position in eBay shares and derivatives, according to its own statement
- May 3, 2026 - GameStop submits a non-binding $55.5 billion takeover proposal for eBay at $125 per share; Wall Street Journal first reports the bid
- May 4, 2026 - eBay confirms receipt of the offer; Cohen appears on CNBC in a combative interview; eBay shares jump roughly 5%, GameStop shares fall roughly 10%
- May 5, 2026 - Burry announces on Substack that he has sold his entire GameStop position; warns the deal would push leverage to 7.7 times earnings
- May 6, 2026 - Cohen posts on X that eBay insiders sold more than $120 million in stock over the past five years while buying none; Cohen begins listing personal items on eBay "to pay for eBay"; eBay suspends his account
- May 7, 2026 - CNBC reports that TD Securities' financing letter requires the combined company to maintain an investment-grade credit rating; Moody's estimates leverage could approach nine times
- May 9, 2026 - Patrick Boyle publishes a detailed breakdown of the bid, outlining why each component of the financing is weaker than it appears
Summary
Who: Ryan Cohen, CEO of GameStop, with eBay as the target; Michael Burry and retail investors as key secondary figures
What: A non-binding $55.5 billion unsolicited takeover bid for eBay, structured as half cash and half GameStop stock, with $20 billion in debt financing backed by a non-binding letter from TD Securities
When: Announced Sunday May 3, 2026; bid confirmed and market reaction played out the week of May 4-10, 2026
Where: United States; both companies are publicly listed on US exchanges
Why: Cohen's compensation package pays out up to $35 billion if GameStop reaches a $100 billion market capitalization - a target that is nearly impossible to hit through organic growth but more achievable by acquiring a company worth four times GameStop's current size