The following is a guest editorial courtesy of Carolane de Palmas, Markets Analyst at Retail FX and CFDs broker ActivTrades.

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In a move that caught Wall Street by surprise, GameStop Chief Executive Ryan Cohen announced an unsolicited $56 billion offer to acquire eBay on May 3rd. This proposed merger between a $12 billion company seeking to take over a $46 billion business has sparked significant debate about ambition, feasibility, and the future of e-commerce. But what’s really driving this audacious acquisition attempt? And can GameStop actually pull it off?

5 Reasons Why GameStop Wants to Buy eBay

1. Tap Into a Massive Buyer Network

eBay commands a staggering 135 million active buyers worldwide and generated $11 billion in revenue last year—a figure that grew 8% year-over-year. This customer base represents an enormous platform that GameStop could leverage to expand its reach far beyond its current footprint. For a company trying to reinvent itself in an increasingly digital world, access to such a vast and established audience is invaluable.

2. Strategic Alignment in the High-Margin Collectibles Market

Both companies share a surprisingly strong overlap in their business strategies, particularly in the booming collectibles sector. GameStop has been pivoting toward higher-margin items including Pokémon trading cards, sports memorabilia, retro games, and nostalgic consoles. eBay has similarly doubled down on collectibles, sports memorabilia, trading cards, and one-of-a-kind fashion items. This natural synergy between the two businesses suggests significant opportunities for operational efficiency and revenue enhancement.

3. Transform Physical Retail Into a Competitive Advantage

Here’s where Cohen’s vision becomes particularly clever. GameStop still operates approximately 1,600 stores across the United States—a national retail network that eBay simply doesn’t have. Instead of viewing these locations as liabilities (as many have in the post-pandemic era), Cohen sees them as strategic assets. He proposes using GameStop’s brick-and-mortar stores as collection and authentication centers for eBay sellers, effectively bridging the digital and physical retail worlds. This hybrid model could unlock entirely new customer experiences and operational efficiencies that neither company could achieve independently.

4. Launch Live Commerce and Video-Based Shopping

Cohen believes eBay should expand significantly into live commerce—a rapidly growing segment where brands sell products directly to consumers through real-time video streams. This is an area where eBay currently lags behind competitors and represents untapped revenue potential. By combining this vision with GameStop’s 1,600 retail locations, the combined company could create broadcast studios and shopping experiences that competitors would struggle to replicate.

5. Create a Genuine Amazon Competitor

Perhaps most ambitiously, Cohen sees the merger as creating a truly formidable challenger to Amazon’s dominance in e-commerce. “It could be a legit competitor to Amazon,” Cohen stated. With eBay’s vast marketplace infrastructure, established buyer network, and revenue base combined with GameStop’s retail footprint and collectibles expertise, Cohen envisions building a company worth “hundreds of billions of dollars.” In a market where Amazon has seemingly become unbeatable, the appeal of creating a meaningful alternative is compelling.

A Small Fish Attempting to Swallow a Larger One

What makes Cohen’s proposal particularly audacious is the sheer scale disparity between the two companies. GameStop, valued at approximately $12 billion, is attempting to acquire eBay, which carries a market capitalization of roughly $46 billion. This nearly four-fold difference in company valuation represents one of the largest relative acquisitions ever attempted.

Historically, smaller companies pulling off mega-deals isn’t unprecedented. Paramount successfully won a bidding war for Warner Bros. Discovery in 2024, and Charter Communications executed a debt-fueled merger with the much larger Time Warner Cable in 2015. So while the odds are long, they’re certainly not impossible.

The Massive Financing Challenge

The real hurdle facing this deal isn’t ambition, it’s mathematics. GameStop has already taken concrete steps by building a 5% stake in eBay and securing a commitment letter from TD Bank for $20 billion in debt financing. Additionally, the company has approximately $9 billion in cash available on its balance sheet.

Here’s the problem: those funding sources account for roughly $29 billion of the $56 billion price tag. That leaves GameStop needing to secure an additional $27 billion—nearly as much as the company’s entire current market value.

To close this financing gap, Cohen would likely need to tap outside investors. The most probable sources would be Middle Eastern sovereign-wealth funds or other institutional investors seeking exposure to a transformative retail venture. While such investors exist and have deployed capital in unconventional deals before, convincing them to back a leveraged acquisition of this magnitude remains a significant obstacle.

Wall Street Skepticism and Execution Risks

The investment community is decidedly cautious. Analysts at Bernstein Research have publicly stated, “We see real challenges to structuring this deal,” noting that the transaction could jeopardize eBay’s ongoing turnaround strategy, which has actually been working. The company’s recent quarterly performance demonstrated strong momentum, with sales driven by value-conscious consumers and a stock price that’s appreciated roughly 50% over the past year.

“Why disrupt things? The turnaround is working,” Bernstein analysts noted—a pointed observation about the risks of attempting such a dramatic restructuring.

eBay also operates in an increasingly competitive landscape that extends far beyond Amazon. Etsy, Craigslist, Temu, and a host of niche marketplaces have carved out their own user bases, making the competitive moat less defensible than it might appear.

It’s also worth noting that Cohen has a substantial personal stake in pulling off this acquisition.

GameStop restructured his compensation package at the beginning of 2024 to create powerful incentives for growth. Under this arrangement, Cohen could earn as much as $35 billion in stock compensation if the company’s market value reaches $100 billion. That’s a significant motivator, though it also raises questions about the alignment of interests and the prudence of betting the company on such an ambitious play.

Cohen has also signaled confidence in his vision by committing to serve as CEO of the combined company post-acquisition without taking a salary, instead tying his entire compensation to the combined business’s performance.

What Happens Next?

eBay’s board faces a fascinating decision. Accept GameStop’s overture or rebuff it? The offer represents a 20% premium to eBay’s Friday closing price, which could be attractive to shareholders. However, board members must weigh this immediate gain against the strategic vision Cohen is presenting.

The gaming retailer’s proposition is undeniably bold and contains genuine strategic merit. The collectibles overlap is real, the retail footprint is valuable, and the vision for a reinvented marketplace has intellectual appeal. However, the financing challenges are substantial, the execution risks are considerable, and there’s genuine uncertainty about whether the combination would actually succeed in creating the Amazon-scale competitor Cohen envisions.

For now, this remains one of the most intriguing—and contentious—acquisition proposals in recent memory. Whether it ultimately succeeds or joins the long list of audacious deals that never came to fruition will tell us something important about the state of American retail, the appetite for transformative corporate restructuring, and the persuasive power of a visionary CEO with a compelling story.

Sources: The Wall Street Journal, CNBC, BBC, Yahoo Finance

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