Retail investors’ favorite stock has another new explosive point? GME plans a “snake swallowing an elephant” acquisition of eBay, CEO aims for a hundred billion market cap.

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According to sources cited by the media, GameStop is preparing to make an acquisition offer for eBay. This move is part of CEO Ryan Cohen's ambitious plan to transform the retailer into an industry giant with a market value exceeding $100 billion.

Sources say GameStop, which had a market cap of about $11 billion as of last Friday’s close, has quietly accumulated eBay shares before sending out the potential purchase offer. eBay is several times larger than GameStop, with a market cap of around $45 billion as of last Friday’s close.

After The Wall Street Journal revealed GameStop's acquisition plan, eBay shares soared more than 10% after hours on Friday, with GameStop shares also rising about 5%.

Insiders say that if all goes according to plan, GameStop could submit its acquisition offer as soon as later this month. If eBay is not receptive, Cohen might bypass management and make a direct tender offer to eBay shareholders. The specific details of the potential acquisition offer are still unknown.

Cohen has made it clear he is scouting for major M&A opportunities. In an interview at the end of January this year, he revealed he was considering potential acquisition targets, particularly in the consumer and retail sectors, and plans to significantly expand the company’s business beyond video games and collectibles.

GameStop revised Cohen's compensation package at the start of this year, adding extra incentives to drive improvement in the company’s market value and profitability. If certain targets are met (including a market value surpassing $100 billion), Cohen can receive up to $35 billion worth of stock.

Michael Burry, the real-life inspiration for "The Big Short," and other GameStop investors strongly support Cohen’s plan. In his personal Substack newsletter, he wrote that GameStop should use its large cash reserves for transformational acquisitions.

GameStop shares have risen about 30% year-to-date, powered in part by the market’s eager anticipation of Cohen’s acquisition plans.

eBay shares have gained more than 50% over the past twelve months, thanks to its strategy of focusing on core categories like collectibles and fashion starting to bear fruit. In February this year, eBay announced a $1.2 billion acquisition of second-hand fashion trading platform Depop from Etsy.

As of the end of March this year, GameStop held about $9 billion in cash, a sharp increase from $4.8 billion a year earlier. At that time, Cohen may call on his massive online following to rally support for the deal.

Cohen is the co-founder of online pet supply retailer Chewy. At the end of 2020, he made a huge investment in GameStop stock and publicly criticized the company’s slow pace of transitioning to e-commerce, gaining a large number of loyal followers as a result. In January 2021, he joined GameStop's board when the company was valued just over $1 billion. Later that year, he became board chair, vowing to reverse the fortunes of the struggling retailer.

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