EBAY Stock Jumps Overnight On 20% Premium GameStop Bid — Michael Burry Sees 'Sky-High' Upside Despite Risks

• The buyout offer represents about a 20% premium to eBay’s closing price on Friday.
• Michael Burry warned that limited borrowing capacity could force GameStop to issue more shares, diluting Cohen’s ownership. 
• The deal would use over $9 billion in GameStop cash plus external funding. 

eBay (EBAY) stock surged 14% overnight heading into Monday after GameStop (GME) CEO Ryan Cohen made an unsolicited bid to acquire the e-commerce company in a deal valued at roughly $55.5 billion.

Shares of GME also jumped 9% overnight late Sunday. The company is offering $125 per share in a mix of cash and stock, representing a 20% premium to eBay’s closing price on Friday. The retailer has assembled an economic interest of about 5% in eBay through a combination of shares and derivatives.

Michael Burry’s Take On GME’s Ambitious Deal 

Reacting to speculations around a potential deal on Saturday, Michael Burry, known for predicting the 2008 financial crisis, in his Substack post said any full takeover would represent a dramatic leap for GameStop, given the disparity in valuation.  

Burry said the video game company cannot borrow much money, which could be a big problem. Since eBay already has considerable debt and is growing slowly, GameStop would probably have to raise money by issuing more shares. That would spread ownership across more shareholders and reduce Cohen’s share and control in the combined company.

“I am not doubting Ryan. I think if he is doing this, he sees low hanging fruit that can be accessed easily. Not easy to see from outside his mind. I still will believe the execution risk is high, and the reward is sky-high if done right with eBay,” Burry said in his Substack chat. eBay stock traded over 12% higher overnight on Sunday. 

The investor added that the deal also wouldn’t help GameStop hit its financial targets as much as other options might, and it would lower the company’s value per share on paper. While combining the two companies could create a strong collectibles and e-commerce business, he said the financial trade-offs look weak compared to other potential acquisitions.

Further, in a post on X platform, Burry had urged Cohen to evaluate other potential acquisition targets, including Etsy (ETSY), Roku (ROKU) and Wayfair (W), among others. 

Financing EBAY And GME Transaction

The proposed deal would be funded through a blend of GameStop’s existing liquidity, estimated at more than $9 billion, and external financing. The company said it has secured a highly confident commitment from TD Securities for up to $20 billion to support the acquisition.

A key part of the plan is to cut eBay’s costs. GameStop aims to save about $2 billion a year within the first year after the deal closes. Most of the savings would come from spending less on marketing, improving how product development is managed, and combining back-office jobs like finance and administration.

Under the proposal, Cohen would lead the combined entity.

What Are EBAY Retail Traders Saying? 

On Stocktwits, retail sentiment around EBAY stock remained in ‘extremely bullish’ territory. 

A user questioned the deal and wondered how a company with no sales buy a much larger, revenue-generating company. 

Another user said eBay “probably will get bid up to around $150 to take over,” and added that  Gamestop “want this deal bad.” 

EBAY stock has gained over 19% year-to-date, while GME has gained over 32%. 

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