Meme Stock 'with a Million Followers' Eyes Takeover of E-commerce Giant
Jakarta - GameStop, the video game retail company, has submitted an acquisition offer for eBay valued at US$55.5 billion (Rp963 trillion). This means the company, whose shares are renowned as a “meme stock,” aims to take over a firm with four times its valuation.
The name GameStop skyrocketed in 2021 when its share price surged up to 1,500% in a single day. This rise was triggered by massive purchases from retail investors, particularly based on information from the Reddit social media forum.
Reddit users in the r/wallstreetbets forum “collaborated” to drive up GameStop’s share price against major investors holding short positions.
Currently, GameStop’s market capitalisation is around US$12 billion, or just about a quarter of eBay’s market capitalisation of US$46 billion.
GameStop CEO Ryan Cohen stated that he wants to make eBay more competitive in vying for the e-commerce market against Amazon.
“eBay should be worth, and will be worth, hundreds of billions of dollars. I want to make eBay worth hundreds of billions of dollars,” Cohen told the Wall Street Journal, as quoted by CNBC International.
GameStop has acquired 5% of eBay’s shares and has secured a US$20 billion loan commitment from TD Bank to finance the acquisition transaction. The company also has US$9.4 billion in cash.
Cohen stated he is prepared to battle eBay’s board of directors with a direct offer to shareholders.
In its offer, GameStop outlined plans to cut costs at eBay by up to US$2 billion per year. These cost reductions are projected to lift eBay’s earnings per share from US$4.26 to US$7.79.
GameStop also plans to transform its 1,600 offline retail stores into physical infrastructure for eBay. The GameStop stores are intended to serve as locations for eBay users to verify product authenticity, handle fulfilment, and host live commerce.
U.S. video game retailer GameStop announced on Sunday that it has made an unsolicited, non-binding offer to acquire eBay for $125 per share in a cash-and-stock deal, valuing the e-commerce platform at roughly $55.5 billion.
The offer, split evenly between cash and GameStop common stock, represents a 20% premium to eBay’s Friday close of $104.07, and a 46% premium to its closing price on 4 February - when the gaming retail giant started building a stake in the company, GameStop said in its statement.
Shares of eBay surged as much as 13.4% in after-hours trading to around $118. GameStop, which became a so-called “meme stock” during a 2021 retail frenzy that drove sharp gains in its shares, jumped around 4% to $27.6 per share.