Link: https://www.sec.gov/Archives/edgar/data/1326380/000119312526231493/xslSCHEDULE_13D_X02/primary_doc.xml

>... in addition to the 25,000 shares of Common Stock beneficially owned directly by the Reporting Person, the Reporting Person has acquired economic exposure to a further 29,078,699 shares of Common Stock underlying Put/Call Pairs (as defined below). Together, the 25,000 shares of Common Stock beneficially owned directly and the shares of Common Stock underlying Put/Call Pairs constitute approximately 6.55% of the outstanding shares of Common Stock, based on the 444 million shares of Common Stock stated by the Issuer as being outstanding as of April 24, 2026 in the Issuer's 2026 Q1 10-Q. In the event of physical settlement of the Put/Call Pairs, GameStop would have the sole power to vote or direct the vote of the shares of Common Stock underlying such Put/Call Pairs.

Edit: Title should read "RC ups GME exposure to 6.55% of eBay (new 13D/A)" (eBay shows up twice..)

Bitcoin seems to be topping out at $85K. The 200SMA is providing strong resistance while liquidity continues to pull back. This would conclude the bullish leg that started in Feb. Expecting a dip to the bottom of the parallel channel now ... $65–$70K.

BTC - TA and liquidity trace

To the extent that $MSTR is largely tethered to BTC, this implies a top is in for MSTR too. Notice the bearish divergence that supports this view.

MSTR TA

Based on my model, this suggests $13x could be next.

Scenario analysis

Hello, $MSTZ!

As I'm sure you've all seen, GME has been falling in price while eBay has been going up since the announcement of RC's intention to acquire eBay.

Price action since GME's offer to acquire eBay

There are three interesting things going on here.

The Merger Arb

(... still called a "merger" arb even though technically this is an acquisition)

When an acquirer (GME) announces a stock-inclusive bid for a target (eBay), arb desks immediately put on the pair: long the target, short the acquirer.

They do this because:

1. eBay should converge toward $125, allowing them to capture the spread between current price and offer price
2. Whereas, GME falls because (a) it's issuing stock = dilution, (b) it's most of its spending cash, and (c) the short leg of the arb book itself creates mechanical selling pressure

Institutional eBay shareholders are also shorting GME to hedge the stock portion of the consideration. They lock in the exchange ratio by shorting GME, which will be offset by the GME shares they will receive as half the payment.

Thus, what we're seeing on this chart - EBAY +8.5%, GME -18.8% since May 4 - is that pair trade being put on at scale, plus eBay shareholders locking in the offer.

Market: "We're not there yet"

Now.. pure "merger" arb would suggest eBay trades much closer to deal value. eBay trading is at $113 against a $125 is a ~10% spread.

In a deal the market expected to clear cleanly, the spread would be much tighter (2-4% is typical for friendly, financed deals near close). A 10% gap says the market is pricing meaningful deal-break risk - eBay's board rejected it, regulatory uncertainty, financing uncertainty, or GME walking away.

Market is basically saying, it doesn't buy that this deal closes at $125. It's saying something like there's a real probability of a deal at some premium, but we're not quite there yet.

The Reflexive Effect of GME's Price Drop on eBay's Price

Because the offer is 50% stock, GME's price decline mechanically reduces what eBay holders would actually receive.

At $25 GME, the offer was $125.

At $21.60 GME, the stock half is worth ~14% less, so the blended offer is now closer to ~$116. Because $21.60 x 2.5 = $54, and not $62.50.

To preserve the original $125 offer, RC needs to better his offer on the stock front.

Which just means more GME dilution, which pushes GME lower, and so on. This is the downward spiral risk in stock-heavy hostile bids, and it's part of why the GME selloff is so consistent.

Let me know if you have any questions!

The options market seems to be expecting another RC offer. This time, north of $125.

Here's why.

With GME, we see:

• Some put buying
• Massive call selling

This suggests the options market expects GME to not go up. (As opposed to "go down" - an important distinction.)

This makes sense if an offer is incoming, since everything is calibrated to the current price of GME.

Note that most options trading is short term, and traders are largely playing the arb rather than expressing a long term view.

5-day GME option flow (Tradytics)

With eBay, we see:

• Heavy call buying after the Board rejected RC's offer
• Virtually no put activity

This suggests that while there was low confidence in RC's initial offer, traders now see a higher likelihood of success on the second attempt. As would be expressed by a higher price in response to the offer.

5-day eBay option flow (Tradytics)

I believe the market is estimating a > $125 offer because the heaviest call buying today was at the 110C, 119C and 125C strikes. The 119C and especially the 125C would see very little gains if a successful offer is made at $125 again, and IV collapses.

Top OI change, eBay (Unusual Whales)

We can also see decent OI in higher strikes all the way to 150C. Though some of these could be sold calls too.

All OI, eBay (Unusual Whales)

Of course, since eBay is at $113 already, that is another reason to expect an offer north of $125.

$150, perhaps?

https://preview.redd.it/zrra8sltf01h1.png?width=1206&format=png&auto=webp&s=66badf2f559dd7dbac6058c2e3f135c703ab16fa

Tl;dr:

• Illustrative shareholder returns in RC's proposed compensation plan does not price in any future capital raises, or any future M&A (including eBay).
• Shareholder returns will be +108% instead of the claimed +463% if eBay deal goes through, as share price goes from ~$24 to ~$50.
• Meanwhile, RC makes $18B on equity - almost 2X the cumulative EBITDA delivered, 18% of the company, and 2000% his current position. 🤯

The Claims

There's this table on page 48 of the 2026 Proxy Statement that suggests shareholders will see 463% returns once RC meets his hurdles:

RC and Stockholder returns as presented in the 2026 Proxy Statement

It comes with this plea:

>These illustrative outcomes demonstrate that Mr. Cohen’s potential value realization under the award is directly proportional to the magnitude of value created for stockholders, and that no value is realized absent significant increases in the Company’s market capitalization. As demonstrated above, stockholders would realize the substantial majority of any value created, with Mr. Cohen’s participation limited to a minority portion that is only realized after significant stockholder gains have been achieved.

And makes these assumptions (bolded parts are what I will comment on below):

• Common shares outstanding as of the Grant Date, including the potential exercises or conversions from then-outstanding compensatory employee equity and then-outstanding convertible notes and warrants, and assuming no change to the common shares outstanding over time
• For each row below, Mr. Cohen does not exercise any stock options of the CEO Performance Award until the respective hurdle is achieved (i.e., each row assumes he exercises all of the cumulatively earned stock options through said respective hurdle)
• Mr. Cohen exercises all stock options upon exercise (i.e., does not net settle), with such cash exercise proceeds being paid to the Company
• The % of Value Realized by CEO via Award, assumes a rounded starting market capitalization of $10.0 Billion, which reflects the rounded estimated market capitalization at the time the Compensation Committee contemplated and designed the CEO Performance Award (recognizing the actual market capitalization on the Grant Date was $9.3 Billion)
• Note: Importantly, this table does not take into account any other future dilutive events (or anti-dilutive events) over the 10-year term of the CEO Performance Award even though such events may occur. Accordingly, this table should only be used for illustrative purposes, recognizing that future dilutive events would significantly decrease the value that Mr. Cohen would realize from the award at each respective market capitalization hurdle (as there would be more shares outstanding, thereby reducing the in-the-money value per stock option at any given market capitalization hurdle)
• In addition, each row of the table also assumes there are no earlier exercises prior to all respective earned stock options being exercised in the respective row; any earlier exercises by Mr. Cohen would also decrease the total realized value that Mr. Cohen would receive from the award upon exercise

The Reality

Let's assess these claims, shall we.

We can immediately question these two assumptions:

1. No dilution from any source other than option exercise or employee SBC. I.e. no M&A stock issuance, no capital raises, no employee equity grants, no convertible note conversion, no warrant exercise, other than what we know about already. Virtually impossible, given the 10-year time frame.
2. RC exercises in full at each hurdle and pays cash for the strike price ($3.5B cash outlay if all 171.5M options are exercised at $20.66). That cash flows back to GME, which is why the "Market Cap Created" line in the table includes the exercise proceeds. No.. It is much more likely that he "net settles" (i.e. shares are sold to cover the cost of the exercise) instead of forking out $3.5B out of pocket.

Then there's the eBay deal, which by itself would issue another ~1.1B shares, more than doubling the post-conversion share count and pushing total outstanding north of 1.6B.

Kinda funny that the proxy's 463% number assumes GME doesn't do the very thing that the same proxy is asking authorization to do.

Shareholder Returns vs RC's Takeaway

Say GME issues another 400M shares over the next 10 years. Conservatively. That puts share price at $50 (given a $100B market cap, and 2B shares.)

Or a +108% return. Quite a far cry from the claimed 463%.

This translates to the following CAGRs, based on how many years he takes to get to $100B:

• 3 years: 27.7%
• 5 years: 15.8%
• 7 years: 11.1% (at par with 10-year S&P returns)
• 10 years: 7.6% (below historical S&P returns)

Personally, RC asking for $18B of equity - almost 2X the EBITDA delivered, 18% of the company, and 2000% his current position - when shareholders make just +108% seems ... egregious.

RC's performance hurdles (2026 Proxy Statement)

Takeaway

Generally, what we are seeing is the market cap hurdles are nominally ambitious, but the per-share hurdles they translate to are quite modest once the share count expands.

Unfortunately, RC's incentive structure rewards growing the absolute size of the enterprise, not necessarily growing per-share value above a market benchmark.

And boy are those incentives misaligned with potential shareholder returns.

(Generated with Gemini)

Tl;dr:

• GME and eBay have had very different trajectories under RC and Iannone respectively - managed contraction vs "bought" growth
• eBay has the highest net income margin but also the second highest opex margin in this peer group
• None of the peers who grew users did so while cutting marketing spend

(Disclaimer: All images and figures generated by Claude based on 10-Ks, 10-Qs and some 8-Ks. All thoughts are mine.)

Strategy and financial performance - GME vs eBay

RC tweeted something about eBay's performance earlier today. Let's take a deeper look, for context.

The key distinction over the last five years is, eBay chose to "buy" growth in the face of intense competition, while GME chose to downsize to a manageable cost base given its shrinking target market.

eBay's growth was modest and unglamorous, but it was growth, and it came from inside the existing business. The bet was that a mature marketplace could be slowly reaccelerated by tuning the engine.

GME chose the opposite path - one of a managed contraction. The company closed stores, exited international markets, killed the NFT marketplace, shrank inventory, cut SG&A, and made no serious investments to reignite the gaming retail business itself. Profitability came from cutting the business down to something small enough to break even on, then layering interest income from the cash pile on top.

Capital flows is quite the contrast:

• Capital was returned by eBay: divestitures, ~$15B+ of buybacks, and share count going from 718M to 468M.
• Capital flowed into GME: share count grew roughly 7x, and they raised billions from shareholders.

Thus, the strategic positions RC and Iannone hold today are essentially polar opposites:

• Iannone spent his years proving you can grow a marketplace incrementally without aggressive cost surgery
• RC spent his years proving you can produce earnings by shrinking a business faster than its revenue declines.

This is what we see reflected in their relative performances.

I think they both did a good job given their chosen strategies.

GME and eBay's financial performance - a comparison (Claude)

Comparison across peers

Now let's compare GME and eBay to three peers (same ones I had shared the insider trading data for.)

Revenue of GME, eBay, AMZN, WMT and ETSY (Claude)

Net margin % - GME, eBay, AMZN, WMT and ETSY (Claude)

OpEx as % of Revenue - GME, eBay, AMZN, WMT and ETSY (Claude)

These are my takeaways:

• eBay is the highest-margin business in this set. But they are also the one whose opex intensity has actually drifted up over the period - the cornerstone of RC's critique.
• Amazon has been doing what RC accuses eBay of failing at - investing through a cycle and getting margin expansion on the other side. Except, they did not do so by cutting opex in absolute dollars (it grew from $130B to $280B), but by growing revenue faster than opex.
• Etsy is the cautionary tale that should make RC think real hard about this attempted merger. It tried to grow through M&A, but ended up losing a quarter of active buyers, operating margin collapsed, and they needed to write off $1B in goodwill.
• Walmart is the boring-disciplined comp. They have run on ~20% opex for six years straight, in a band roughly 100 bps wide. An absolute beast.
• I think we are all very familiar with GameStop's trajectory: revenue down 29%, but operating income flipped from loss to profit, though most of it is from the cash interest income that dwarfs the retail business.
• None of the operators in this set who actually grew users - Amazon, Etsy, Walmart - did it by cutting marketing.

So.. what lessons can we apply to the ongoing saga?

Reflections in the context of the acquisition offer

Well, I think the success of the acquisition will largely depend on whether RC can sustain or improve eBay's 2025 GMV growth of 7%. If he can do so, then he can risk shaving off some costs and still have some room for error.

However, if he takes more of a GME-like approach where cost-cutting comes with a drop in the top line, I fear he's buying a melting ice cube at a "46%" premium and stripping out the marketing budget that's keeping the melt slow... Cost cuts that worked on a fading specialty retailer with $9B of cash to fund the wind-down may not translate to a marketplace whose revenue depends on persuading buyers to come back.

Given all this, I think the jury is very much out on whether RC's plan is a realistic one.

Since much has been made of insiders not buying shares at eBay, I thought it would be helpful to look at what insider trading patterns look like for its competitors and GME.

Source for all images: www.secform4.com/insider-trading/

GME:

https://preview.redd.it/nsjkf83sjzzg1.png?width=930&format=png&auto=webp&s=436de6a222bca2da0cc06ba356c2ae88b688f366

eBay:

https://preview.redd.it/61v3m5vtjzzg1.png?width=930&format=png&auto=webp&s=b246b514ee747e2ed0cbd4589e34656258f7920b

Amazon:

https://preview.redd.it/ddw3adnxjzzg1.png?width=930&format=png&auto=webp&s=82cae5ce35a58d81892dbf6946b45b39ea1b7414

Walmart:

https://preview.redd.it/5qimlsnnjzzg1.png?width=930&format=png&auto=webp&s=25409fa40c4c4674909a02642ac7499bfaa7cae2

Etsy:

https://preview.redd.it/qvuuha7qjzzg1.png?width=930&format=png&auto=webp&s=52f3cf949957cfa15235f8efa9436080ac5761d9

For better or for worse, insiders (execs, Board members etc.) treat shares as "compensation," and liquidate periodically.

Versus as an "investment."

I'm pretty sure RC would have to execute a "reverse triangular merger" process to acquire eBay. Going to detail what that entails in this post.

First, since y'all like crayons, here's a pictorial depiction of what will happen:

The RTM eBay acquisition process

Now, here are the steps in plain sequence. Numbers used are from my post: Harpoon in the Water: An Assessment of Ryan Cohen's Offer

Step 1: GameStop forms "Sling Merger Sub": GameStop incorporates a new wholly-owned Delaware subsidiary as a shell entity. No assets, no operations, no employees. GameStop receives 100% of Sling Merger Sub's stock in exchange for a nominal capital contribution (typically $1,000).

Step 2: GameStop secures financing: GameStop draws ~$18.35B from the TD Securities-led syndcate credit facility into a designated escrow account. Combined with $9.4B from GameStop's own balance sheet, the cash side of consideration ($27.75B) is now staged. GameStop also files the registration statement to authorize the new shares (~1,110M).

Step 3: GameStop capitalizes the Merger Sub GameStop transfers the staged $27.75B in cash plus the obligation to issue 1,110M new GME shares into Sling Merger Sub. The Sub now holds what is called "the full deal consideration."

Step 4: The Merger Effective Time At a precise moment specified in the merger agreement (typically 12:01 AM on a Monday), several things happen simultaneously by operation of law:

• Sling Merger Sub merges into eBay
• Sling Merger Sub ceases to exist
• eBay survives as the legal entity
• Each outstanding share of eBay common stock automatically converts into the right to receive $62.50 cash + 2.5 GME shares (or pro-rata adjusted election outcome)
• All eBay stock previously held by Sling Merger Sub (which was the consideration staging) effectively becomes held by GameStop
• eBay becomes a wholly-owned subsidiary of GameStop

In short, eBay shares cancel and convert; eBay's parent changes from public shareholders to GameStop Corp.

Step 5: Consideration Distribution The exchange agent (typically Computershare or similar) distributes consideration to former eBay shareholders based on their holdings and elections:

• Cash component: ~$27.75B disbursed to former eBay shareholders' brokerage accounts
• Stock component: ~1,110M new GME shares issued and credited to former eBay shareholders' brokerage accounts
• Fractional shares cashed out at the closing price

Step 6: Bond and Equity Compensation Conversions Triggered by the change of control, several adjustments execute:

• eBay's bonds either accept the change of control put (bondholders elect repurchase at 101% of par over 30-90 days) or remain outstanding with eBay (now a GameStop subsidiary) as continuing obligor
• eBay's unvested RSUs convert to GameStop equivalent RSUs at the merger ratio
• eBay's PSUs settle at target performance levels per merger agreement
• eBay's executive change-of-control provisions trigger; severance packages activate for departing executives

(I haven't modeled an amount for the put bondholders, cashing out of RSUs, or severance exactly, but estimating it's less than $1B total.)

Step 7: Stock Market Adjustments On the next trading day:

• eBay common stock delists from Nasdaq (ticker EBAY ceases trading)
• GameStop's expanded share count (~1,559M total) is reflected on NYSE
• Index providers rebalance - eBay drops out of S&P 500; GameStop's market cap rises significantly, potentially triggering inclusion in larger indices
• Short positions in eBay convert per consideration mix (each short owes $62.50 cash + 2.5 GME shares per former eBay short share)

Step 8: Combined Entity Operations Begin GameStop Corp. now consolidates eBay's financials. Cohen assumes CEO role of combined company. Integration planning shifts from preparation to execution. Cost-cutting program begins.

References for folks who want to dig into RTMs more:

• Basics: https://www.investopedia.com/terms/r/rtm.asp
• Additional considerations: https://ventures.wyrick.com/blog/mechanics-and-advantages-of-reverse-triangular-mergers

Published simultaneously on X: https://x.com/NitherDither/status/2052576161318731812

Disclosure: Agentic underlings assisted me in authoring this post. My impressive brain contributed most of the content, and can vouch for the rest based on cross-checks, and given its prior experience with M&As.

(I'm using the same outline here as for the piece I posted ~6 hours ago: Harpooning the Whale: Three Ways GameStop Could Buy eBay. If something seems unclear, I've probably addressed it in that piece.)

🎯Update on The Hunt

And ... RC has formalized his bid! $125.00 per share, $55.5B aggregate equity value, 50% cash / 50% stock, with Cohen committing to take the CEO role at no salary.

The financing relies on $9.4B of GME cash plus an $18.35B drawdown of a $20B "highly-confident" letter from TD Securities, with the balance issued as ~1,110M new GME shares.

Whether this deal creates or destroys value hinges almost entirely on whether RC's claimed $2.0B of annualized cost reductions actually materialize:

• Base case: At current operating performance, the combined entity earns $0.30 of EPS and trades to ~$23 on a 20x multiple - just below today's $25.
• Bull case: With full synergies, EPS reaches $1.26, EBITDA expands by two-thirds, and the share price clears $49.

Now that the harpoon is in the water, let's see if our whaler can bring it home.

📜 The Offer Terms

The offer is in the form of a public, non-binding proposal, and would be considered a hostile approach that bypasses private negotiation with eBay's board.

RC's Offer

GME has already accumulated a 5% economic stake (built since February 4 via derivatives and direct ownership) and is filing 13D and HSR notifications.

Pricing is anchored to the February 4 unaffected close ($85.84), producing the headline 46% premium; from May 1's pre-rumor close, the effective premium is closer to 21%.

🎯 One Whale, Two Outcomes

With the deal terms now known, we can shift our analytical focus from financing structure to operating execution.

Two scenarios bracket the realistic outcome envelope:

1. The Base Case: Assumes the deal closes at offered terms and combined operations continue as-is - no cost cuts achieved.
2. The Bull Case: Assumes RC delivers the full $2.0B of annualized synergies he has publicly committed to within twelve months of close.

Pro forma financial metrics and share price

Evidently, the synergy thesis is the entire deal.

Without it, GME has paid a 46% premium to load up nearly $24B of net debt against an asset whose pro forma earnings cover interest expense by only ~1x. With it, the combined entity earns nearly enough to justify a multiple expansion that doubles the share price.

The gap between $0.30 EPS and $1.26 EPS - a 4x swing on the same revenue base - demonstrates how completely this deal's economics depend on RC's operating thesis playing out!

🔍 The Cost Thesis: Clean Strike or Glancing Blow?

RC's $2.0B cost reduction breaks down as $1.2B from Sales & Marketing (halving eBay's $2.4B FY2025 spend), $0.5B from G&A (-42%), and $0.3B from Product Development (-19%). His supporting argument is, eBay's $2.4B in S&M produced just one million net new active buyers in FY2025 (134M → 135M), implying a marginal acquisition cost of $2,400 per buyer. That figure is genuinely poor.

But the framing conflates customer acquisition with customer retention. I bet most of eBay's S&M spend keeps the existing 134M buyers active, not just acquires new ones. Halving the budget likely accelerates churn of marginal users, which compounds over time.

Also, the $0.5B G&A cut (-42%) assumes a level of corporate fat that may not exist at a company that has already executed multiple cost programs. GME's own track record - SG&A reduction of $800M (47%) since FY2021 - is the comparable RC cites, but GME did that by closing stores and shrinking the business. eBay's structure is different...

Frankly, I have my doubts that RC will be able to achieve anything close to what he is claiming, without gutting eBay.

🎭 All Hands' Calculus

eBay's board will likely reject the initial offer outright, labeling it as "unserious" based on the cost-cutting claims alone. They will also likely dismiss the using of 1,600 stores as broadcasting studios for live commerce - it works at scale in China, but is unproven in the US.

Less likely, they will seek a higher price - the 21% effective premium to recent trading and the structurally weaker financing commitment give them grounds to push back. A revised bid at $135-140 with committed financing is plausible, which would push the deal closer to $60B and worsen the status-quo math.

For existing GME holders, the bet is binary: this is a vote on whether RC can execute eBay-scale cost reductions while preserving the marketplace's customer base. The truth is probably in between - perhaps $1.0-1.4B of synergies materializing rather than the full $2.0B, which would land EPS around $0.75-1.00 and a share price in the $34-42 range. That's still creative-not-destructive territory, but a long way from the $7.79 EPS headline.

🔮 My Read

I don't think this deal closes in its current form, but something gets done. Likely a renegotiated transaction at a higher price with different financing, or eBay finding a white knight.

I'd put the probabilities (pulled out of my 🧠 and 🍑 in equal proportions) roughly as:

• Deal closes as proposed (~15%): RC would need eBay's board to fold quickly, debt markets to firm up the financing, and no competing bidder to emerge. Possible but unlikely.
• Deal closes at revised terms (~35%): eBay engages, negotiates the price up to $135-145, demands committed financing rather than the HCL, and possibly gets better governance protections. This is the modal outcome.
• eBay rejects, RC walks (~25%): Board determines the offer is inadequate and the financing too soft. RC has signaled willingness to go hostile but may not have the financing depth to actually do it. Stock falls back, RC exits the eBay position over time.
• Competing bidder emerges (~15%): A strategic (Amazon, Shopify, even a sovereign wealth fund) or a PE consortium counters at $140+ all-cash. eBay's Board would probably prefer this.
• Financing or other collapse (~10%): Credit markets seize up, the SEC challenges the derivatives-built stake, or deal fails on something other than price.

The strongest reason to think it closes: RC has been planning this for at least three months (started accumulating Feb 4), GME's board has unanimously approved (though it is a rubber stamp Board), and the structural argument (eBay underspending on growth, overspending on retention) has merit. He has skin in the game.

The strongest reasons to think it doesn't: The financing is unusually weak for a deal this size - a single-bank HCL versus a typical 5-7 bank committed package. The 21% effective premium to recent trading isn't generous. And eBay's board has clear grounds and time to push back - they can simply ask for committed financing as a condition of engagement, which alone could derail the timeline.

What I'd keep an eye on:

• eBay's first response and tone,
• whether other banks join the financing syndicate,
• whether any large eBay holder publicly comments,
• any noise from Amazon or other strategics, and
• whether GME stock rises or falls on the proposal; if it rises meaningfully, RC's stock currency strengthens and his bargaining position improves; if it falls, the whole thing gets harder.

This is a fascinating deal in the making, and any informed observers could reasonably land anywhere from "this is happening" to "this is theater."

Curious to see if RC snags a sperm whale, or an orca!🍿

https://preview.redd.it/4eoljftge1zg1.jpg?width=880&format=pjpg&auto=webp&s=5c5cdcdb2373d42857a35e210c34aa6f8dc2b5a8

(Published simultaneously on X: https://x.com/NitherDither/status/2051137152822489502)

🎯The Hunt at a Glance

WSJ reported May 1 that Ryan Cohen (of $GME, $12B mkt cap) is preparing a takeover bid for $EBAY ($46B mkt cap). This would make it the largest reverse-takeover in retail history.

In this piece, I go over three plausible financing scenarios that bracket the realistic deal envelope:

• an all-stock merger,
• a hybrid half-stock/half-debt structure, and
• a maximum-debt LBO.

And their implications, and associated risks and other considerations.

Tl;dr: Applying scenario-appropriate exit multiples, the merger ($29.68) and half/half ($25.37) both produce equity value at or above where GME currently trades, while the max-debt LBO ($17.80) destroys value. And the financing choice, far more than the premium, determines whether this deal creates or destroys value for existing GME holders. The half/half scenario is the one that likely fits the financing markets' and RC's control needs.

Aight degens, let's dive into the details.

🐋 Three Ways to Catch the Whale

Of course, A $12B acquirer cannot buy a $46B target with cash alone. Three financing levers must work together:

• GME's existing $9B cash war chest,
• new debt secured against eBay's $2.7B annual EBITDA and recurring marketplace cash flows, and
• GME stock issued as transaction currency.

Based on the WSJ piece, the deal architecture is likely to be the classic LBO template - a newly-formed acquisition entity raises debt against the target's assets, with the acquirer contributing cash and stock as equity. It is also consistent with RC's publicly stated vision of converting GME into a Berkshire-style holding company that uses leverage as a force multiplier for capital allocation.

Nevertheless, I explore a range of possibilities for reasons that will soon become clear.

Here are the three financing scenarios:

Financing scenarios for GME takeover of eBay

All-stock merger (15% premium): Mergers of equals typically clear at smaller premiums because eBay holders share in the combined upside rather than being cashed out. No new debt is added; both balance sheets carry forward intact, producing a combined entity with ~$10.3B of cash and modest existing leverage. The cost is dilution: GME holders shrink from 100% of GME to 17% of NewCo, and RC personally drops from his current 8% stake to roughly 1.4%.

Half-stock / half-debt (20% premium): A hybrid structure using $5B of GME's cash, $12.5B of new acquisition debt, and $37.7B in stock. Net leverage settles at a manageable ~4.5x EBITDA, well within high-yield market capacity for a marketplace business. Legacy GME holders retain 23% of NewCo. This is what I think is most likely.

Max-debt LBO (25% premium): Pushes leverage to ~9.3x EBITDA, beyond what most lenders will provide without significant pricing concessions or asset-backed structuring. This scenario uses $7B of GME's cash, $25B of new debt, and only $25.5B of stock, minimizing dilution (legacy holders retain 31%) but maximizing financial risk. This is the scenario most consistent with RC's stated holding-company vision but the hardest to actually finance.

⚖️ Weighing the Catch

The financing structure transforms the income statement primarily through two channels: incremental interest expense (which scales with new debt) and share dilution (which scales inversely with debt usage). The combined entity has ~$14.7B revenue and ~$3.0B EBITDA in all scenarios; what differs is how that EBITDA gets divided between debt holders and equity:

Pro forma financial metrics and share price

Consider the implications:

• In the LBO, $25B of new debt at a 7.5% blended rate generates roughly $1.9B of annual interest expense - about 75% of combined operating income - which collapses combined net income from the $2.45B sum of the standalone companies to just $167M. (!)
• The merger preserves earnings entirely (no new interest burden) but spreads them across 5.7x as many shares.
• The half-stock/half-debt structure with only $12.5B of new debt is meaningfully better positioned: roughly $940M of incremental interest expense leaves $935M of combined net income, more than five times the LBO scenario.

Which would you choose, if you were RC?

I'm using EV/EBITDA multiples that I think are appropriate in my model. Here are some other scenarios within realistic bounds of that multiple. (GME is currently at 24x, and eBay is at 18x.)

Projected share prices for various EV/EBITDA multiples

By the way, there is another structure that protects GME holders better: GME only buys a controlling stake (say 60-70%) using mostly cash and debt, rather than acquiring 100%. That requires far less stock issuance - maybe 200-300M new shares instead of 1B. eBay would remain partially public as a sub. This is closer to the "Instant Berkshire" model that may be of interest to RC. In this scenario, GME shares could plausibly hold $20-30 even through closing.

🥴 Eyes Bigger Than the Stomach?

Implied share prices apply scenario-appropriate exit multiples that reflect how each structure trades in market: stock-for-stock mergers earn higher multiples than LBOs because of synergy potential, lower required IRRs, and absence of debt-financing constraints. Applied this way, the all-stock merger ($29.68) and half-stock/half-debt structure ($25.37) both produce implied share prices at or above current $25 trading levels.

Only the max-debt LBO ($17.80) destroys equity value relative to today. The mechanical reason: in the LBO, the first $28B of enterprise value pays debt holders before equity sees a dollar; the merger captures full EV plus retained net cash, and the half/half captures most of it.

That said, reported earnings in the LBO scenario understate cash generation. Combined EBITDA of ~$3.0B less cash interest of ~$2.0B less taxes and capex of ~$450M leaves roughly $550M of free cash flow - enough to begin deleveraging at ~$500M per year. After five years, debt would shrink to ~$22B and earnings would recover.

The risk here is with interest coverage of just ~1.5x, there is almost no margin for error if eBay GMV declines, integration runs hot, or rates rise.

🧑‍✈️ The Captain's Calculus

As you can see, the fundamentals favor the merger, but RC's strategy favors the LBO. This human angle cannot be ignored.

These three factors point toward a debt-heavy structure regardless of what our models say:

• Control: An all-stock merger dilutes RC from 8% of GME to 1.4% of NewCo, ending his ability to drive capital allocation. The LBO leaves him at ~2.5% - still small but with concentrated influence through the existing board and his activist track record.
• Governance: Mergers of equals typically split board seats 50/50 and require shared management. RC's holding-company vision requires concentrated capital allocation authority, incompatible with power-sharing.
• Story stock dynamics: An LBO produces a transformational narrative supporting retail enthusiasm and the meme premium GME currently enjoys. A merger produces a more conventional entity that institutional investors will value strictly on cash flows.

Given these considerations, I think the half-stock/half-debt scenario closely approximates the most likely actual outcome - a hybrid with $10-15B of new debt at a ~20% premium and stock making up roughly two-thirds of consideration.

It is the only structure that simultaneously produces equity value at or above current trading levels, satisfies what debt markets will fund for a marketplace business, and preserves RC-friendly governance through 23% legacy ownership.

🌀 Storm Watch

This deal is not a slam dunk by any stretch of the imagination. Here are some things to watch out for:

• Financing market dependence: $22-25B of new debt assumes high-yield markets remain receptive to a marketplace LBO. Widening credit spreads or a soft economic patch could force more equity into the mix or kill the deal entirely.
• Execution risk: Combining a brick-and-mortar gaming retailer with a global e-commerce marketplace creates negligible operational synergies and meaningful integration risk. Most deal economics depend simply on operating eBay competently after close. A friendly negotiated deal at a more modest premium with eBay management staying in place will work out better, with RC as capital allocator, but eBay's existing team running operations.
• Multiple assumptions & deal status: Implied share prices apply scenario-specific multiples (24x merger / 21x hybrid / 18x LBO); lower multiples would compress all values toward the LBO outcome.
• eBay hostility: eBay's board would likely reject this opportunistic bid, forcing a tender offer that often costs more, as higher premiums are needed to win shareholder votes directly.

🥽 Watching the Water

If RC lands the harpoon, he'll have pulled off the largest reverse-takeover in retail history and shown the world that meme-stock equity is real currency - usable for hunting whales, not just trading them. Other cash-rich, sentimentally-charged tickers will be taking notes.

If the line snaps and the whale gets away, the lesson cuts the other way: the gap between what activist CEOs dream up and what credit markets will actually underwrite is wider than the bull case wants to admit.

For now, I'm treating the WSJ rumor as directionally credible but structurally fuzzy, and will be waiting early to see the whale breach.

And maybe eventually end up on the cover of the TIME Magazine.

https://preview.redd.it/z98yd2fj3zyg1.jpg?width=880&format=pjpg&auto=webp&s=35d7b3fa4ce97ffaa841ef98492c169d6a5a5a99

Simultaneously published on X: https://x.com/NitherDither/status/2051017402599846169