GameStop (GME) Stock Rises as Ryan Cohen Refuses to Back Down on eBay Bid

Key Highlights

• GameStop (GME) shares advanced 1.4% during pre-market hours to $22.07 following a regulatory filing that confirmed the company’s continued interest in acquiring eBay (EBAY).
• The video game retailer forecasts adjusted EBITDA exceeding $600 million for fiscal 2026, representing an almost 74% increase from the $345 million recorded in fiscal 2025.
• Ryan Cohen, the company’s CEO, pulled a contentious executive compensation proposal valued at up to $35 billion in potential gains, eliminating a potential obstacle to the eBay acquisition.
• The company currently maintains economic interest in approximately 9.8% of eBay via owned shares and derivative instruments.
• GME currently trades at a forward enterprise value-to-EBITDA ratio of approximately 9.6x, sitting below the 10.1x retail industry benchmark.

Shares of GameStop experienced a 1.4% uptick in pre-market sessions on Tuesday, touching $22.07. The rally followed regulatory disclosures revealing the company’s determination to pursue an eBay acquisition, despite facing an initial rejection from the e-commerce giant.

GameStop Corp., GME

The acquisition saga continues to unfold. GameStop previously submitted an unsolicited bid valued at approximately $56 billion, combining cash and equity, translating to around $125 for each eBay share. eBay’s leadership swiftly dismissed the overture, characterizing it as lacking both credibility and appeal while expressing reservations about the financial structure and debt implications.

Instead of retreating, GameStop signals its intent to press forward. The retailer indicated plans to publish additional documentation outlining the strategic rationale supporting the merger, although no specific release date has been announced.

CEO Withdraws Controversial Compensation Plan

Perhaps the most notable development this week involved a decision unrelated to eBay itself. Ryan Cohen canceled a scheduled shareholder vote on his executive incentive package, originally slated for the company’s July 7 annual shareholder meeting.

The compensation arrangement featured 171.5 million stock options spanning a decade, divided into nine separate segments linked to market capitalization and profitability benchmarks. Had GameStop achieved every milestone, Cohen’s potential compensation could have reached approximately $35 billion.

The issue centered on perception. Should the eBay transaction succeed, detractors might contend that Cohen would benefit from compensation simply through deal completion, as the merged entity would naturally progress toward required market cap and profitability targets. Withdrawing the proposal eliminates this potential criticism before it could interfere with the acquisition campaign.

Concurrent with the filing, GameStop elevated its financial projections. The retailer now anticipates adjusted EBITDA surpassing $600 million for fiscal 2026, up from $345.4 million in fiscal 2025. This represents a significant improvement, with GameStop explicitly linking the revised forecast to its ongoing eBay initiative.

Recent financial performance supports this optimism. GameStop delivered record quarterly net income of $389.6 million in its latest report, alongside unprecedented first-quarter operating income of $143.3 million. Revenue increased 14% compared to the prior year, primarily fueled by the collectibles segment.

It’s important to recognize that $268.4 million of that net income stemmed from unrealized gains on eBay-related derivatives. Even excluding this component, adjusted net income remained strong at $179.3 million.

Building a Substantial Position

GameStop has established more than a passive interest in eBay. The retailer owns 4.3 million eBay shares outright and maintains additional economic exposure to 39.05 million shares via derivative contracts, totaling roughly 9.8% of the e-commerce platform.

Following regulatory clearance in early June, these holdings became eligible for physical conversion. While GameStop currently lacks voting authority over these shares pending actual settlement, the position provides Cohen with meaningful influence regardless.

From a valuation perspective, GME now commands a forward enterprise value-to-EBITDA multiple of about 9.6x using the updated guidance. This actually sits beneath the 10.1x retail sector median, representing a departure from the stock’s historical pattern of trading at elevated multiples during the meme-stock phenomenon.

The shares remain positioned nearer to their 52-week floor of $19.93 than the ceiling of $28.10. Market conditions offered little support today, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all posting modest declines.

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