From Newsgroup: comp.sys.ibm.pc.games.action
GameStop is a laughing stock now. The American retailer hasn't been
well respected for years and its only due to its brief flirtation with meme-stock valuation that it survives at all. There's no value to the
company and no future. It's been shedding stores and employees like a
Maremma sheds hair in spring. The only thing that's of any worth in
the corporation anymore is how stupid it all is.
So of course GameStop is doubling down on that. They say they want to
buy EBay now and then use the stores as a place to buy/sell/validate
EBay merchandise.
Now, the actual IDEA isn't as completely ridiculous as it sounds. It's
not a GOOD idea, but using Gamestop's storefronts to act as a
cosignment store / front-end for the online auction house is not
totally out there. In fact, Ebay *used* to own brick-and-mortar store
back in the early 2000s. They abandoned them because it wasn't
necessary to their business (or financially viable) but the concept
isn't as out-of-left-field as it first appears. It still wouldn't
work, but you can at least understand the logic.
What doesn't work is the finances. At all.
So, Ebay has an asking price of $56 billion USD. How will Gamestop pay
for this? Well, Gamestop has several assets of its own. It has $9
billion dollars in cash. The company itself is worth $11 billion in
stock (half of that will be part of the offer made to EBay). It has a not-locked-in but still solid promise of a $20 billion loan. So let's
just do the math:
$9 billion cash + $5.5 billion stocks + $20 billion
loan = a $34.5 billion offer. Sure, that's not the
asking price, but surely Ebay won't mind knocking 40%
off that?
GameStop's CEO Ryan Cohen explains this by saying they'll just release
more stock to make up the deficit. But even if they sell all GameStop
stock their offer is still $16 billion below the asking price.
Questioned on this, Cohen suggests they'll just sell even more stock.
Because that's how it works, right?
Even if the deal were to go through, the new Ebay/Gamestop company
would end up being saddled with $20 billion in debt (plus the load of
hundreds of worthless retail stores). Needless to say, EBay isn't
receptive to the offer.
Of course, none of this is serious. This is just another attempt at
stock manipulation; a last ditch effort to parlay attention into a
tiny rise in GameStop's stock value. "Look at us, we're still a viable business! Please somebody come buy our worthless stock from us!".
Amusingly, the announcement actually caused a 3% DIP in Gamestop's
stock value.
Incidentally, if you haven't seen the interview, here is Ryan Cohen
trying to explain the math:
https://www.youtube.com/watch?v=NxD-KGsvPI0&t=1s
The guy is stoned out of his skull (or at least appears to be).
And yet he's still held in high regard by his crypto-bro meme-stock
followers who think he's a financial genius and this latest offer will certainly be taken seriously.
Gamestop: worthless except for how stupid it's become. If they could
somehow monetize that, they'd be a a real contender.
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