eBay Inc. shares surged more than 13% in after-hours trading on Friday, following a Wall Street Journal report that GameStop Corp. is preparing a takeover bid for the online marketplace. The news, which also lifted GameStop shares, has sparked intense speculation about the feasibility and implications of such a deal, given the significant size disparity between the two companies.
According to the report, GameStop has quietly built a stake in eBay and may take an offer directly to shareholders if the board resists. No formal offer, price, or financing details have been announced, leaving investors to weigh the potential outcomes.
eBay enters this report from a position of strength. The company recently projected second-quarter revenue ahead of analysts' expectations, citing support from collectibles, auto parts, and live auctions. CEO Jamie Iannone noted that consumers can still find value on eBay when income is pressured. In the first quarter, eBay posted revenue of $3.1 billion, a 19% increase, with gross merchandise volume reaching $22.2 billion, up 18%.
GameStop, led by Ryan Cohen, has been shrinking its retail footprint while building a substantial cash pile. The company closed the fourth quarter with $9.0 billion in cash, cash equivalents, and marketable securities, but its net sales fell to $1.104 billion from $1.283 billion a year earlier. This cash gives Cohen room to maneuver, but the scale difference between GameStop and eBay raises questions about how any deal would be financed.
Analysts have expressed caution. TD Cowen's John Blackledge raised his eBay price target to $88 from $87, maintaining a Hold rating. He called the first-quarter numbers solid but flagged the operating-margin outlook as slightly soft, as management invests more in growth.
The potential takeover comes as eBay pursues its own growth strategy. In February, eBay struck a deal to acquire Depop from Etsy for roughly $1.2 billion in cash, targeting a younger, fashion-focused audience. The transaction is expected to close by the end of the third quarter, pending regulatory approvals in the UK and Australia.
For GameStop shareholders, the dilemma is whether acquiring a larger marketplace can reverse the ongoing decline in its core retail operations, or if it will saddle the company with a larger, more complex business. eBay shareholders, meanwhile, are waiting to see if a formal bid materializes, and on what terms.
If a bid leans heavily on stock, eBay shareholders could bear execution risk. A debt-heavy deal might face lender skepticism. eBay's board could also push back, arguing that its stand-alone strategy—including Depop and the collectibles push—could be worth more than folding into a Cohen-led retail roll-up.
