GameStop's $56B offer for eBay
The bid is the show
Last week, I had the distinct privilege of hosting a fireside with Nintendo’s former president and COO for the United States, Reggie Fils-Aimé. As the grand finale of my Spring semester at Stern, I co-hosted this event with Naomi Clark from the NYU Game Center and Mitu Khandaker from the Game Design Future Lab. It was a blast.
You can watch our conversation in its entirety on Twitch, or read about some of the highlights here, here, and here.
One of my favorite parts was Reggie’s account of how Nintendo sees the world. As a firm founded in 1889, it has seen more than its fair share of societal shifts, to say the least. During a period as we experience now, with lots of layoffs and abundant uncertainty, Reggie reminded everyone of a quote from Hiroshi Yamauchi, Nintendo’s third president, who served from 1949 to 2002:
“No matter how good the business is, remember it’s not that good—and no matter how bad the business is, remember it’s not that bad.”
The hallmark of any chief operating officer is their steady hands and ability to navigate a company through economic turmoil.
Given that Nintendo added 500 people in the last year, while layoffs continue to pester the industry, it’s a lesson we’d do well to take to heart. The discipline that looks unimpressive in good years is the only thing that makes bad years survivable.
On to this week’s update.
BIG READ: GameStop’s $56B offer for eBay
Once the most powerful games retailer in the United States, and arguably the world, GameStop is a bottomless well for anyone studying strategy and entertainment.
I previously dedicated a full chapter to the company’s history and rise to power in my first book, and have written about it repeatedly since, including on its midlife crisis and transition into a meme stock. In the latest development, its CEO, Ryan Cohen, announced an acquisition offer for eBay over the weekend, valuing the firm at $56 billion.
The news raises several red flags.
First, the math doesn’t math.
GameStop, a company valued at $11 billion, wants to buy a company worth $46 billion. That’s not necessarily a new idea (several American retailers have transitioned to become holding companies), but GameStop is raising the stakes considerably.
Certainly, Cohen has managed to improve the retailer’s financial position over the last few years, from a $381 million net loss in 2021 to $418 million in net income last year. To accomplish this, GameStop has had to close stores, cut its headcount, and turn the corporate treasury into a cryptocurrency hedge fund. It’s a tactic we’ve previously seen deployed by Tesla CEO Elon Musk.
The stock has rewarded the turnaround unevenly: GameStop is up about 17 percent year-to-date but still down 12 percent over the trailing 12 months and 41 percent over the past 5 years, while eBay is up 81 percent over the same period. The market, in other words, has never quite believed the story.
But GameStop has fallen far from its 2012 peak. Since then, revenue has dropped from $9.6 billion to $3.6 billion in 2026, or roughly a third of its size. The profit Cohen cites as evidence that he turned the firm around is mostly interest income, not from retail. Of the $418 million in annual profit, $130 million comes from interest on its $9 billion cash hoard. It means that GameStop is much less a specialty games retailer and more an investment fund with a side business in selling games.
And, considering it’s in the business of selling physical goods, it’s done little to insulate itself from the current spike in oil prices (due to the War in Iran), chipset costs (due to the heavy investment in AI), and tariffs (due to no reason at all, but here we are). Its reliance on a healthy relationship with console manufacturers has historically been key, and that category isn’t exactly on fire. Retailers are already known to operate on razor-thin margins, and a 2024 report from the Consumer Technology Association was prescient in predicting the rising cost of doing business for consoles. None of it is good for GameStop.
It has drifted from its physical games business. Roughly 80 percent of its $11 billion is based on its $9 billion treasury, and the operating business is valued at just $2 billion. Moreover, the physical assets that differentiate GameStop—its storefronts and staff—are down, too. Its store count currently sits at around 3,200, down from 7,535 in 2017, and headcount is down from 20,000 to about 4,000 today. So, quick math, roughly 1.25 full-time employees per storefront, down from double that.
Despite this, GameStop is offering $55.5 billion for a company that is four times its size, meaning it will have to borrow money. According to Cohen, it has access to $20 billion based on a “highly confident letter” from TD Bank. The $11 billion market cap, incidentally, is roughly halfway to the $20 billion floor that triggers the first tranche of Cohen's $35 billion compensation package, granted in January (more on that in a moment).
That brings me to the second part that feels off, the overall vibe.
