GameStop Turns eBay Pursuit Into a Nearly $5 Billion Investment

GameStop’s multibillion-dollar investment in eBay could signal a shift in its pursuit of the online marketplace from would-be acquirer to influential shareholder, while giving the video game retailer a significant foothold in digital commerce.

GameStop said Monday (Aug 31) in its preliminary second quarter results that it converted a previously disclosed derivative position tied to eBay into a direct equity investment during the quarter ended Aug. 1. The company now holds approximately 43.4 million eBay shares worth about $4.95 billion.

The move could give CEO Ryan Cohen another avenue for pursuing the strategic relationship he has described, even as eBay has rejected GameStop’s $56 billion acquisition proposal. GameStop has not said that its takeover effort is over.

The investment also materially affected GameStop’s quarterly results. The company expects net income of $290 million to $310 million, including approximately $238 million of net gains associated with its eBay derivative and equity investment. Those gains helped offset an approximately $75 million loss on digital assets and related receivables.

Cohen has argued that GameStop and eBay could combine their positions in collectibles and trading cards, with GameStop’s roughly 1,600 U.S. stores potentially serving as hubs for authentication and other services. A partnership or joint venture could pursue some of those opportunities without requiring a massive acquisition.

In the quarter, eBay reported 15% year-over-year increases in revenue, to $3.2 billion, and gross merchandise volume, to $22.4 billion. Its growth has been concentrated in categories where inventory scarcity, buyer trust and seller expertise can matter more than delivery speed.

In February, eBay invested in Pay by Bank provider TrueLayer as part of a U.K. collaboration allowing shoppers to authorize payments through their banking apps. A deeper GameStop-eBay relationship could therefore connect physical retail, digital marketplaces, payments, collectibles and authentication.

GameStop’s original acquisition pitch focused on cutting eBay’s $2.4 billion annual sales and marketing spending and generating $2 billion in yearly cost reductions. eBay rejected the proposal, citing financing uncertainty, leverage, operational risks and concerns about profitability and governance. Cohen later reiterated that GameStop was “coming for eBay one way or another.” The new equity position suggests that “one way or another” may increasingly mean influence rather than outright ownership.