GameStop (GME) CEO Ryan Cohen may be rethinking his $56 billion bid for eBay (EBAY), and that could be a positive development for GME stock. Bloomberg reported Monday that Cohen is considering withdrawing the takeover offer and pursuing a partnership or joint venture with the online marketplace instead.
The potential shift would represent a major change in strategy. Rather than taking on billions of dollars in financing to acquire eBay, GameStop could give the company access to its roughly 1,600 U.S. stores while gaining greater exposure to eBay’s massive online marketplace.
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For GME investors, that could mean less financial risk while still giving Cohen a way to pursue his broader vision for GameStop.
GME Stock Has Struggled Since the eBay Bid
GameStop shares have been under pressure since Cohen unveiled the eBay proposal. The stock dipped 1.93% on Monday, leaving it 6.2% lower year-to-date (YTD) and close to its lowest level in more than two years.
Investors are clearly having concerns about the scale of the proposed transaction. GameStop, with a market capitalization of $8.43 billion, was looking to acquire a company worth more than $50 billion.
The original proposal called for a combination of cash and stock, with GameStop potentially raising as much as $20 billion in third-party acquisition financing. That raised obvious concerns about leverage and the financial burden such a deal could place on GameStop.
A partnership would remove much of that concern. Instead of trying to absorb eBay, GameStop could use its existing stake and retail footprint to build a relationship with the company without taking on massive debt.
www.barchart.com The eBay Pivot Could Be Better for GME Stock
The biggest question for GME investors is Cohen's next move.
A tie-up with eBay may help merge the two organizations. eBay is an enormous online market, and GameStop's retail stores and dedicated user base of collectors and gaming customers prove its presence in the physical world.
Cooperation in the area of trading cards and collectibles with others could be a particularly significant opportunity. GameStop already has a big footprint in collectibles with its expansion efforts, and now the retailer might be in a position to utilize the eBay channel without buying the entire company.
In addition, Cohen has about 9.8% of an economic stake in eBay via GameStop.
That's what makes the partnership much more appealing to GME stockholders than the original takeover. Thus, the company will have a body of investors on the board and strategic influence without spending $10 billion or more in a takeover.
Strong Earnings Give Cohen More Flexibility
The potential eBay pivot comes as GameStop's underlying financial performance has improved significantly.
In the first quarter of fiscal 2026, revenue increased 14% year-over-year (YOY) to $835.3 million. Net income surged to $389.6 million from $44.8 million a year earlier, while operating income reached $143.3 million.
GameStop also expects adjusted EBITDA to exceed $600 million for fiscal 2026, compared with $345.4 million in fiscal 2025.
The company is also doing more beyond the eBay situation. GameStop has authorized a $2 billion share repurchase program through 2029 and recently completed a transaction involving about $1.4 billion of convertible notes in exchange for common stock.
Those moves give Cohen additional flexibility as he decides whether an eBay partnership, another strategic investment, or simply maintaining GameStop's huge cash position offers the best return for shareholders.
Wall Street Remains Skeptical on GME Stock
Despite GameStop's improved profitability and massive balance sheet, Wall Street remains cautious.
The consensus rating on GME stock is currently “Hold,” with an average price target of $13.5. Based on GameStop's $18.82 price, that target implies 28.3% downside.
Wedbush is the most vocal bear. Analyst Michael Pachter has a “Sell” rating and a price target of $14. He remains skeptical that GameStop can execute a meaningful turnaround. The cautious view is also showing the concerns about GameStop's ability to generate sustainable operating growth rather than relying on investment gains, collectibles momentum, or its large cash position.
Still, Cohen potentially abandoning the $56 billion eBay acquisition could remove one of the biggest risks hanging over GME stock. If GameStop can turn its eBay stake into a strategic partnership while continuing to improve profitability and preserve its balance sheet, investors may ultimately view the retreat from a full takeover as a smarter move.
www.barchart.com On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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