GameStop CEO Ryan Cohen’s $56B Plan to Take Over eBay
In a Nutshell
Ryan Cohen is attempting a $56 billion takeover of eBay to combine it with GameStop's collectibles business, arguing eBay has stagnated under professional management with rising costs, flat revenue, and declining GMV despite massive e-commerce growth. He plans to cut $2 billion in operating expenses, expand live commerce using eBay's physical stores as fulfillment nodes, and build a digital collectibles marketplace for in-game items. Cohen is personally investing $500 million and states he will pursue any means necessary—including going hostile—since eBay management refuses to engage and has no skin in the game.
These notes were generated by AI and may contain inaccuracies.
Everyone hates GameStop and the media wants the company to fail. Board members make hundreds of thousands of dollars annually without buying stock with their own money and only attend a handful of meetings. Management is grossly overpaid. The speaker emphasizes that nothing is more American than risking your own capital and questions why everyone wants GameStop to fail.
Ryan Cohen joins the All-In Interview. The host notes it has been about a decade since their last dinner in New York. Cohen is currently attempting to acquire and run eBay, a significant story that connects back to the early days of the internet 25-30 years ago.
Cohen originally planned to launch an online jewelry website. He attended trade shows and purchased hundreds of thousands of dollars in inventory before building the website and distribution. While shopping at a neighborhood pet store with his poodle, he realized he understood pet products better. Key factors that attracted him to the pet category included:
- Recurring revenue purchases
- A still-fragmented market with neighborhood pet stores that Petco and PetSmart had not yet fully disrupted
- Amazon had offered pet products since the 1990s but had not achieved significant scale in the category
The vision was to replicate the neighborhood pet store experience online at scale. Cohen studied Amazon's supply chain best practices including fast shipping, broad selection, and competitive pricing, while combining this with deep product knowledge from the pet store model. The entire team consisted of pet owners, creating genuine passion for the category.
Chewy operated as a low-margin business focused on market leadership. The company achieved negative working capital, generating billions in revenue without consuming significant capital. The real competition was always Amazon, which Cohen viewed as world-class in supply chain management.
Key execution principles included:
- Fierce supplier negotiations to achieve the best product costs
- Scaling from pallets to truckloads of inventory
- Moving from distribution centers to direct purchasing
- Labor and warehouse management optimization
- Securing competitive shipping carrier rates
The business operated on pennies—pennies in the red meant failure, while pennies in the black meant success. Cohen personally managed Google AdWords campaigns until 4-5 AM and negotiated directly with major suppliers. He viewed supplier relationships as mostly transactional rather than relationship-driven. If suppliers sent gifts, it indicated overpayment; if suppliers stated they never wanted to speak again, it meant the right price was achieved.
Customer cohorts demonstrated high stickiness. Cohen shifted from jewelry to pet food specifically because it was a recurring, consumable item. For the first several years, Chewy focused exclusively on food, treats, and litter. The strategy centered on treating customers exceptionally well to drive repeat purchases and word-of-mouth referrals.
Customer experience initiatives included handwritten holiday cards, pet portraits, and 24/7 customer service. Any issues were resolved in the customer's favor, leading to continued shopping and organic referrals among pet owners.
Cohen built and sold Chewy in 2017 for $3.35 billion. The company later went public and reached approximately $20 billion market cap within two years. Cohen expressed no regret about the timing, noting that nobody has a crystal ball and that everything works out for a reason. He described Chewy as his baby and stated the business would not have allowed for the current conversation if he had remained as CEO.
After selling Chewy, Cohen became an active investor and went activist for the first time. His investment framework focused on established businesses with strong historical track records of profitability that were currently out of favor with passive or activist investors.
Cohen's original GameStop investment was passive, holding under 5% ownership. The CEO at the time contacted him during a battle with another activist, offering a board seat under the assumption Cohen would support management against the activist. Cohen's father had recently passed away, and the single board seat offered was not attractive given the large existing board size.
As conditions deteriorated—GameStop was deemed non-essential during COVID-19 and faced potential bankruptcy—Cohen continued accumulating shares and crossed the 5% threshold. He then faced the decision between filing a 13G (passive) or 13D (active engagement). He chose the 13D filing, signaling intent to engage with management.
Cohen was drawn to GameStop because mainstream media and consensus had written off the company for 15 years, with heavy short interest. He viewed the widespread pessimism and fear as creating opportunity. The original investment thesis centered on an upcoming console cycle (new PlayStation and Xbox), during which GameStop historically performed well as consumers purchased hardware and software.
In early 2021, Cohen joined the board along with two colleagues from Chewy. The stock price surged as short hedge funds covered positions. The company raised $1.7 billion, eliminating all debt.
Cohen initially attempted to apply the Chewy playbook to GameStop by hiring e-commerce talent from Chewy and Amazon. After becoming CEO, he realized this approach was fundamentally flawed. He shifted to maniacal cost cutting, operational efficiency, and focusing on GameStop's core strength in pre-owned merchandise.
The company successfully expanded into collectibles, particularly trading card games (TCG) and sports cards. Today collectibles represent a leading category for GameStop. The trade-in model proved highly extendable—customers can bring graded PSA cards (grade 8 and above) for immediate cash, with GameStop either selling in-store or through warehouses online.
Key differences between Chewy and GameStop became apparent:
- Chewy benefited from repeat purchases and sticky cohorts with rapid inventory turnover
- GameStop faced challenges with slow-moving inventory (such as TVs) that required markdowns if unsold
Cohen had zero physical retail experience when he joined the board and became CEO.
Cohen prioritizes identifying and working directly with existing talent who know the GameStop business deeply. He seeks individuals with "will over skill"—people demonstrating relentless drive. One customer service leader came from an old people's home with no relevant experience on paper but applied repeatedly and demonstrated exceptional motivation.
He describes building a team of "fellow psychopaths" willing to go all-in. Cohen acknowledges he has operating principles but finds them difficult to articulate, preferring a first-principles approach to each business situation.
Collectibles now represent 42% of revenue at $350 million. Q1 revenue reached $835 million, representing 14% year-over-year growth. SG&A expenses were reduced from $228 million to $202 million. The company holds $9.7 billion in cash with $333 million in free cash flow. The board authorized a share repurchase program.
Cohen states that organic growth with GameStop would produce a "nice" but limited business. He prefers to pursue big opportunities, noting that Chewy could have remained a $500 million or $100 million profitable business with reduced marketing spend, but "life is too short to do it small."
Cohen views eBay as highly complementary to GameStop's evolution into collectibles. Both businesses operate in the secondary market, provide liquidity to consumers, handle authentication of secondhand items, and focus on collectibles. GameStop executes these functions in physical stores while eBay operates online at global scale. Cohen notes greater comfort with e-commerce operations compared to physical retail.
Ryan Cohen explained that eBay falls within his circle of competence and he cannot stop thinking about it. He compared it to Chewy, noting that Chewy faced well-funded competitors in the pet space that ultimately failed because it was a low-margin business going head-to-head against Amazon. He likened this dynamic to the airline industry where customers shop primarily by price rather than brand loyalty. Cohen stated that selling pet food online was not a great idea, and GameStop was also not necessarily a good idea, but pursuing eBay is a really good idea regardless of the outcome.
When asked about the moment he decided to make a play for eBay, Cohen revealed he was on the toilet when the idea came to him. He had been studying eBay because of his involvement in the collectibles business. Cohen noted that he had followed eBay for a very long time and came to appreciate their experience and moat in the collectibles space, as well as their refurbished tech business and secondhand business, both areas where GameStop also has significant operations.
Cohen identified eBay's first mover advantage in the marketplace model as a key early strength that allowed them to become the de facto marketplace online, even competing with Amazon initially. He contrasted this with Amazon, which took possession of first-party inventory alongside growing its marketplace, essentially doing what Walmart did but online at scale. Cohen noted that while eBay's early focus on building a marketplace gave them a moat, their execution was great only when founder-operated. Since then, despite massive e-commerce growth, eBay has lost market share to category-focused competitors, live shopping platforms, Shopify, social commerce, and Amazon. eBay has maintained revenue and earnings but has not grown with the broader e-commerce market.
Cohen pointed out that eBay's business has stagnated in recent quarters with operating expenses rising significantly. He emphasized that while eBay remains the de facto marketplace in certain categories, the business should be significantly larger.
Cohen stated that eBay could have been Amazon. He described Amazon's customer experience principles and Seller Central platform as powerful tools that sellers like despite margin concerns. eBay has defaulted into niche categories where Amazon is not strong, such as unique baseball cards, hard-to-find pens, and used auto parts, rather than competing directly in new products like phone chargers.
Cohen agreed that Amazon charges sellers a lot of money. While sellers stay for the reach and audience, there is frustration with margins and hunger for alternatives. He noted that eBay already has a large audience and could potentially compete if positioned correctly.
Cohen stated he would not be interested in taking first-hand inventory and prefers the marketplace model. He noted that the categories where eBay performs well overlap with GameStop's strengths. He characterized going head-to-head against Amazon as not the most attractive business.
Cohen referenced eBay's pattern of buying and selling major businesses, including acquiring PayPal and later spinning it out, buying Skype for $2.6 billion in 2005 and selling 70% for $2 billion in 2009, then selling the remainder to Microsoft for another $2 billion in 2011. He questioned whether these were strategic or tactical errors and whether they were mismanaged or poorly integrated after acquisition.
Cohen expressed preference for focus, citing his strategy at Chewy of concentrating on the core brand rather than creating sub-brands for different geographies. He noted that eBay's recent focus on core operations has not resulted in significant GMV or earnings growth. He criticized eBay's recent acquisitions as nonsensical and advocated for focusing on a singular global brand with significant upside potential.
Cohen summarized eBay's performance since John Donahoe's departure around 2015, an 11-year period. Since COVID, every important metric is down: GMV is down, active users are down by 30 million, operating earnings are down, and revenue is essentially flat or break-even. Operating expenses have risen significantly and now exceed half of revenues despite the company holding no inventory. He noted that while everyone else in e-commerce is growing, eBay is making less money, spending more, and alienating sellers.
Cohen explained that sellers must use third-party tools outside of eBay because the platform does not provide necessary functionality, unlike Amazon Seller Central which offers end-to-end capabilities. eBay eliminated concierge programs for top sellers and now takes them for granted. Cohen emphasized that in a marketplace model, sellers are the customer, and making sellers happy leads to more inventory and sales.
Cohen stated that existing management relies on outside consulting firms rather than rolling up their sleeves to solve root cause problems directly with sellers and engineering teams. He believes management is working with multiple consultants and is not making sellers happy, despite sellers remaining on the platform to move product.
Cohen described how moving from founder-operator leadership to professional management teams results in loss of one-on-one engagement and direct problem-solving. He contrasted this with the need to talk directly to top sellers about pain points and involve engineering teams in solutions.
Cohen outlined three areas of focus for improving eBay. First, immediately improving earnings by cutting $2 billion in costs from an operating base of approximately $5.5 billion in expenses, including $2.4 billion spent on sales and marketing with no user growth. Second, pursuing live commerce growth, noting the $400 billion TAM that is growing quickly in the US and is popular in Asia. He stated eBay has the users, brand, and platform but the platform is inadequate, content creators are missing, and awareness of eBay Live is minimal with an application process that delays seller onboarding. He noted live commerce viewership is limited to a few hundred people at most. Third, extending into digital collectibles by providing liquidity for in-game items such as skins and weapons from AAA titles, creating a marketplace for items with real utility unlike NFTs.
Cohen proposed using eBay's 1,600 stores as nodes that can serve as studios for creators, fulfillment centers, and logistics hubs. This would allow sellers and content creators to focus on content creation while eBay provides support in photography, fulfillment, logistics, and authentication, extending these capabilities to the broader marketplace model.
Cohen argued that in-game digital items have real utility compared to physical collectibles, which are largely ego plays such as owning art or trading cards that are pieces of cardboard in plastic. He stated no marketplace currently provides liquidity for in-game items and that this addressable market could be significantly larger than eBay's physical marketplace, calling it crazy that such a platform does not already exist.
Cohen addressed the eBay board's rejection letter, which acknowledged the offer was incredible but cited financing uncertainty. He noted this is expected because the board does not want to hand over control while making significant compensation. He clarified that financing would come off eBay's own balance sheet, meaning if GameStop cannot secure financing, eBay itself could not either. He reported minimal engagement from management and board level, with the team directing inquiries to high-priced advisors who then fail to schedule meetings.
Cohen explained the decision to pursue a 50% cash, 50% stock structure at a premium, allowing existing eBay shareholders to continue owning a portion of the combined company where near-to-medium term earnings would derive from eBay operations. He stated they do not have $60 billion in cash available and that the presented structure reflects this constraint.
Cohen confirmed that institutional shareholders generally love the eBay business and see significant opportunities. He noted a recent failed vote to reduce the threshold for calling a special shareholder meeting from 20% to 10% of shares outstanding. He contrasted his own commitment, including investing $500 million of personal capital into the transaction without pulling money from GameStop, with eBay management that has not purchased shares in the open market and has been selling tens of millions of dollars worth of stock.
Cohen questioned why media and commentators want GameStop to fail while supporting entrenched management teams with no skin in the game who have never built businesses themselves and have been overpaid as employees. He noted his $500 million personal investment and long-term commitment to GameStop, which has become a stronger business, contrasting this with board members earning hundreds of thousands annually without buying stock and management teams taking zero risk.
Cohen stated he has not met with the eBay CEO despite willingness to fly to California immediately. He confirmed the CEO would receive a parachute exceeding $100 million upon departure. He reported no meetings with board members despite outreach efforts.
Cohen referenced the principle that markets function as a voting machine in the short term but a weighing machine in the long term. He stated that if GameStop continues delivering performance, those wishing for its failure will lose as the weight of results prevails over media narratives.
The media faces a credibility challenge in acknowledging that GameStop is more than a meme stock. To give Ryan Cohen credibility, media outlets would need to admit their prior assessments were wrong—that there is an actual business with real value creation happening. This creates a dilemma where recognizing Cohen's competency as an executive and CEO capable of running eBay better than existing management would simultaneously validate that their original assessment of the situation was incorrect.
Once the media and public consensus formed around GameStop being a "fake" phenomenon during the meme stock craze, rewriting that narrative became difficult. Historical examples show that once a collective narrative is established, participants cannot easily reverse course without damaging their own credibility. The speaker notes this pattern applies to both COVID coverage and GameStop coverage, where admitting error would undermine institutional credibility. To maintain their position, media must continue portraying Cohen as less credible.
Cohen states he will pursue "whatever we need to do, whatever I need to do in order to succeed" when asked whether he would go hostile or use a tender offer. The discussion addresses the dynamics of a banker-led process to maximize shareholder value, noting that without competing bidders, bankers would essentially be negotiating against themselves.
Cohen acknowledges the $56 billion offer represents substantial money with a significant premium. He explains the valuation makes sense specifically because of what he could achieve with the business—both short-term earnings increases and long-term market share gains in live commerce and building a digital marketplace for gaming. Cohen states this is something "an existing management team would never be able to build in their wildest dreams." Antitrust concerns would likely prevent large competitors from pursuing a deal of this size.
Cohen emphasizes he will not stop and will not go away, stating that eBay management should engage with him. An alternative path discussed involves shareholders purchasing shares on the open market and voting in favor of the offer. Historical precedent suggests shareholder bases can turn over in these situations, with investors potentially selling GameStop shares to capture the premium rather than holding long-term positions if the market begins believing Cohen's strategic vision.
Cohen confirms multiple escalation paths exist in their toolkit. He is working with bankers and high-priced advisors on the transaction. The interview concludes with Cohen stating "I'm going all in."
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