GameStop's Bid for eBay Faces Credit Rating Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 15 2026
0mins
Source: seekingalpha
- Significant Debt Risk: Moody's analysis indicates that GameStop's acquisition of eBay could result in total debt soaring to approximately $31.4 billion, representing an over 400% increase relative to eBay's standalone capital structure, which significantly raises the company's financial risk and impacts its credit rating.
- Interest Expense Pressure: The annualized incremental interest expense associated with the new debt is estimated to exceed $1 billion, assuming interest rates are higher than eBay's current weighted average cost of borrowing (around 5%-6%), further constraining the company's cash flow.
- Cash Flow Constraints: eBay is projected to generate approximately $900 million in free cash flow in 2025, while GameStop is expected to report around $600 million, and considering the cash costs to achieve targeted cost savings, the pro forma free cash flow will be significantly constrained, impacting operational flexibility.
- Synergy Targets: GameStop aims to achieve approximately $2 billion in annualized synergies within 12 months post-close, with 60% from sales and marketing, 25% from general and administrative, and 15% from product development, which, if fully realized, could help alleviate the debt burden.
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Analyst Views on EBAY
Wall Street analysts forecast EBAY stock price to fall
8 Analyst Rating
2 Buy
5 Hold
1 Sell
Hold
Current: 112.130
Low
60.00
Averages
95.00
High
112.00
Current: 112.130
Low
60.00
Averages
95.00
High
112.00
About EBAY
eBay Inc. is a global commerce company. The Company's technology empowers buyers and sellers in more than 190 markets globally. Its online marketplace is located at www.ebay.com and its localized counterparts, its off-platform marketplaces and its mobile apps. Its Marketplace platforms enable buyers and sellers to its global scale and continue investments in technology, marketing and customer service. Its eBay Money-Back Guarantee program allows buyers to obtain a refund if an item does not arrive, is damaged or faulty, or differs materially from its description, and applies to most purchases completed through payment methods. It develops intuitive user interfaces; buyer, seller and developer tools; and transaction processing, databases and network applications that enable its users to complete transactions on its Marketplace platforms. Its technology infrastructure simplifies the storage and processing of data, eases the deployment and operation of global products and services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
GameStop Intensifies Hostile Takeover Bid for eBay with Increased Stake
- Increased Ownership: GameStop has raised its stake in eBay to 7.8%, up from 6.6% on May 20, demonstrating its commitment to the acquisition despite eBay's board rejecting its $55.5 billion buyout offer as unrealistic.
- Funding Strategy: GameStop plans to leverage its $9.4 billion cash and liquid investments, along with a financing letter from TD Securities for up to $20 billion in debt, to support this massive e-commerce acquisition, reflecting strong confidence in the deal.
- Cost Reduction Potential: CEO Ryan Cohen asserts that a merger could eliminate $2 billion in annual operational costs within 12 months post-closing, enhancing the strategic rationale behind the acquisition.
- Market Reaction: While eBay's shares hover near multi-year highs at $115.62, giving it a market cap of $49.79 billion, GameStop's stock trades flat around $21.71, with a significantly smaller market cap of $9.73 billion, highlighting the stark contrast between the two companies.
See More
GameStop Expands Economic Exposure to eBay Amid Acquisition Talks
- Increased Economic Exposure: GameStop's latest Schedule 13D filing reveals direct ownership of 25,000 eBay shares and derivative exposure to an additional 34.5 million shares, raising its total economic exposure to 7.78%, indicating a strong intent to pursue eBay acquisition.
- Derivative Contract Details: The derivatives have strike prices ranging from $84.74 to $118.28 per share, and these contracts could convert into actual shares pending federal clearance under the Hart-Scott-Rodino Act, showcasing the company's potential future control over eBay.
- Acquisition Proposal Rejected: Despite GameStop's $56 billion acquisition proposal, eBay has firmly rejected it, labeling the offer as “neither credible nor attractive,” reflecting skepticism in the market regarding GameStop's acquisition capabilities, especially given its market value of only about $10 billion.
- Management Criticism and Market Reaction: CEO Cohen has criticized eBay's operational style, calling for nearly $2 billion in annual expense reductions, while GME stock has gained nearly 8% this year, contrasting with EBAY's over 28% rise, highlighting differing market perceptions of the two companies' futures.
See More
Investment Comparison: Amazon vs eBay
- Amazon Financial Performance: In FY 2025, Amazon's revenue reached $716.9 billion, reflecting a 12% year-over-year growth, with a net income of $77.7 billion and a net margin of approximately 10.8%, indicating the company's ongoing expansion in high-margin segments and operational optimization.
- eBay Market Positioning: In FY 2025, eBay generated $11.1 billion in revenue, an 8% increase year-over-year, with a net income of $2.0 billion and a net margin of around 18.3%, showcasing its strategy focused on niche markets that ensures consistent profitability and efficiency.
- Competitive Risk Analysis: Amazon faces intense competition from tech giants like Microsoft, with regulatory risks from antitrust investigations potentially impacting its marketplace management, while eBay contends with local marketplace competition and AI-driven shopping platforms, increasing operational costs.
- Future Growth Potential: In Q1 2026, Amazon's sales totaled $181.5 billion, a 17% year-over-year increase, while AWS grew at 28%, highlighting the potential returns from its investments in AI infrastructure and suggesting strong growth prospects ahead.
See More
Comparing Investment Prospects of Amazon and eBay
- Amazon Financial Performance: In fiscal year 2025, Amazon's revenue reached $716.9 billion, reflecting a 12% year-over-year growth, with a net income of $77.7 billion and a net margin of approximately 10.8%, indicating its ongoing expansion in high-margin segments and operational optimization.
- eBay Market Positioning: eBay achieved $11.1 billion in revenue for fiscal year 2025, an 8% increase year-over-year, with a net income of $2.0 billion and a net margin of about 18.3%, demonstrating its profitability and efficiency through a focus on unique goods in the marketplace.
- Competition and Risks: Amazon faces intense competition from tech giants like Microsoft, with regulatory risks from antitrust investigations potentially impacting its marketplace management, while eBay contends with local marketplace competition and AI-driven shopping platforms, increasing operational costs and traffic risks.
- Future Growth Potential: While eBay excels in the used goods market, Amazon's rapid expansion into AI infrastructure is notable, with Q1 2026 sales reaching $181.5 billion, a 17% year-over-year increase, and AWS growing at 28%, highlighting its significant future growth potential.
See More
Amazon Launches Custom AI Shopping Assistants for Retailers
- AI Shopping Assistant Launch: Amazon is offering retailers the tools to create custom AI shopping assistants through AWS, enabling launches in as little as 60 days, which significantly enhances customer shopping experiences and strengthens market competitiveness.
- Internal Technology Application: The company has already utilized this technology internally to assist customers in comparing products, making purchases, and reordering, indicating the maturity and effectiveness of its technology, which helps attract more retail partnerships.
- Intensifying Market Competition: With competitors like OpenAI and Google ramping up their investments in AI shopping tools, Amazon's initiative serves not only as a technological expansion but also as a strategic move to counter rivals and solidify its market position.
- Positive Stock Reaction: Following the announcement of this new AI strategy, Amazon's stock rose over 2%, reflecting market optimism regarding its future growth potential and further boosting investor confidence.
See More
Amazon Licenses AI Shopping Technology to Retailers
- Technology Licensing Strategy: Amazon is licensing its internally developed AI shopping technology to other retailers, enabling them to launch customized shopping tools in as little as 60 days, thereby enhancing Amazon's technological influence in the retail sector.
- Customer Engagement: Amazon has signed a partnership with Tapestry-owned luxury brand Kate Spade to utilize the service for launching a gifting assistant, demonstrating market demand and application potential for its technology.
- Competitive Market Landscape: In the AI shopping space, Amazon faces challenges from competitors like OpenAI and Google, which are also rolling out shopping-related AI tools, although some initiatives have stumbled due to technical issues, highlighting market uncertainties.
- Retailer Autonomy: Amazon encourages retailers to develop their own AI tools, emphasizing their deep understanding of products and customers, which allows them to maintain control over the shopping experience and enhances their competitive edge in the market.
See More
GameStop Intensifies Hostile Takeover Bid for eBay with Increased Stake
- Increased Ownership: GameStop has raised its stake in eBay to 7.8%, up from 6.6% on May 20, demonstrating its commitment to the acquisition despite eBay's board rejecting its $55.5 billion buyout offer as unrealistic.
- Funding Strategy: GameStop plans to leverage its $9.4 billion cash and liquid investments, along with a financing letter from TD Securities for up to $20 billion in debt, to support this massive e-commerce acquisition, reflecting strong confidence in the deal.
- Cost Reduction Potential: CEO Ryan Cohen asserts that a merger could eliminate $2 billion in annual operational costs within 12 months post-closing, enhancing the strategic rationale behind the acquisition.
- Market Reaction: While eBay's shares hover near multi-year highs at $115.62, giving it a market cap of $49.79 billion, GameStop's stock trades flat around $21.71, with a significantly smaller market cap of $9.73 billion, highlighting the stark contrast between the two companies.
See More
GameStop Expands Economic Exposure to eBay Amid Acquisition Talks
- Increased Economic Exposure: GameStop's latest Schedule 13D filing reveals direct ownership of 25,000 eBay shares and derivative exposure to an additional 34.5 million shares, raising its total economic exposure to 7.78%, indicating a strong intent to pursue eBay acquisition.
- Derivative Contract Details: The derivatives have strike prices ranging from $84.74 to $118.28 per share, and these contracts could convert into actual shares pending federal clearance under the Hart-Scott-Rodino Act, showcasing the company's potential future control over eBay.
- Acquisition Proposal Rejected: Despite GameStop's $56 billion acquisition proposal, eBay has firmly rejected it, labeling the offer as “neither credible nor attractive,” reflecting skepticism in the market regarding GameStop's acquisition capabilities, especially given its market value of only about $10 billion.
- Management Criticism and Market Reaction: CEO Cohen has criticized eBay's operational style, calling for nearly $2 billion in annual expense reductions, while GME stock has gained nearly 8% this year, contrasting with EBAY's over 28% rise, highlighting differing market perceptions of the two companies' futures.
See More
Investment Comparison: Amazon vs eBay
- Amazon Financial Performance: In FY 2025, Amazon's revenue reached $716.9 billion, reflecting a 12% year-over-year growth, with a net income of $77.7 billion and a net margin of approximately 10.8%, indicating the company's ongoing expansion in high-margin segments and operational optimization.
- eBay Market Positioning: In FY 2025, eBay generated $11.1 billion in revenue, an 8% increase year-over-year, with a net income of $2.0 billion and a net margin of around 18.3%, showcasing its strategy focused on niche markets that ensures consistent profitability and efficiency.
- Competitive Risk Analysis: Amazon faces intense competition from tech giants like Microsoft, with regulatory risks from antitrust investigations potentially impacting its marketplace management, while eBay contends with local marketplace competition and AI-driven shopping platforms, increasing operational costs.
- Future Growth Potential: In Q1 2026, Amazon's sales totaled $181.5 billion, a 17% year-over-year increase, while AWS grew at 28%, highlighting the potential returns from its investments in AI infrastructure and suggesting strong growth prospects ahead.
See More
Comparing Investment Prospects of Amazon and eBay
- Amazon Financial Performance: In fiscal year 2025, Amazon's revenue reached $716.9 billion, reflecting a 12% year-over-year growth, with a net income of $77.7 billion and a net margin of approximately 10.8%, indicating its ongoing expansion in high-margin segments and operational optimization.
- eBay Market Positioning: eBay achieved $11.1 billion in revenue for fiscal year 2025, an 8% increase year-over-year, with a net income of $2.0 billion and a net margin of about 18.3%, demonstrating its profitability and efficiency through a focus on unique goods in the marketplace.
- Competition and Risks: Amazon faces intense competition from tech giants like Microsoft, with regulatory risks from antitrust investigations potentially impacting its marketplace management, while eBay contends with local marketplace competition and AI-driven shopping platforms, increasing operational costs and traffic risks.
- Future Growth Potential: While eBay excels in the used goods market, Amazon's rapid expansion into AI infrastructure is notable, with Q1 2026 sales reaching $181.5 billion, a 17% year-over-year increase, and AWS growing at 28%, highlighting its significant future growth potential.
See More
Amazon Launches Custom AI Shopping Assistants for Retailers
- AI Shopping Assistant Launch: Amazon is offering retailers the tools to create custom AI shopping assistants through AWS, enabling launches in as little as 60 days, which significantly enhances customer shopping experiences and strengthens market competitiveness.
- Internal Technology Application: The company has already utilized this technology internally to assist customers in comparing products, making purchases, and reordering, indicating the maturity and effectiveness of its technology, which helps attract more retail partnerships.
- Intensifying Market Competition: With competitors like OpenAI and Google ramping up their investments in AI shopping tools, Amazon's initiative serves not only as a technological expansion but also as a strategic move to counter rivals and solidify its market position.
- Positive Stock Reaction: Following the announcement of this new AI strategy, Amazon's stock rose over 2%, reflecting market optimism regarding its future growth potential and further boosting investor confidence.
See More
Amazon Licenses AI Shopping Technology to Retailers
- Technology Licensing Strategy: Amazon is licensing its internally developed AI shopping technology to other retailers, enabling them to launch customized shopping tools in as little as 60 days, thereby enhancing Amazon's technological influence in the retail sector.
- Customer Engagement: Amazon has signed a partnership with Tapestry-owned luxury brand Kate Spade to utilize the service for launching a gifting assistant, demonstrating market demand and application potential for its technology.
- Competitive Market Landscape: In the AI shopping space, Amazon faces challenges from competitors like OpenAI and Google, which are also rolling out shopping-related AI tools, although some initiatives have stumbled due to technical issues, highlighting market uncertainties.
- Retailer Autonomy: Amazon encourages retailers to develop their own AI tools, emphasizing their deep understanding of products and customers, which allows them to maintain control over the shopping experience and enhances their competitive edge in the market.
See More
