eBay's Business Turnaround Draws Scrutiny as Takeover Bid Emerges

On May 3, 2026, GameStop CEO Ryan Cohen made one of the most improbable takeover bids in recent corporate history: an unsolicited, non-binding offer to acquire eBay for $125 per share in a cash-and-stock transaction valued at roughly $55.5 billion [1]. GameStop, a company with a market capitalization of approximately $12 billion, was proposing to swallow a target nearly four times its size [2].

"EBay should be worth — and will be worth — a lot more money," Cohen told the Wall Street Journal. "I'm thinking about turning eBay into something worth hundreds of billions of dollars" [1].

The bid landed at a moment when eBay's management had been telling a story of revival — accelerating revenue, growing gross merchandise volume, and strategic bets on authentication and AI. But as the deal's structure, financing, and underlying assumptions face scrutiny, a more complicated picture emerges: one in which financial engineering, aggressive cost-cutting, and a largely flat buyer base complicate the narrative of a business genuinely on the mend.

The Deal: Structure, Premium, and Financing

GameStop's offer of $125 per share represents a 20% premium over eBay's closing price of $104.07 on May 2, and a 46% premium over the stock's price on February 4 — the date when GameStop began building what is now a roughly 5% stake in eBay [3][4]. eBay's 52-week trading range spans $67.87 to $107.34, meaning the offer sits well above even the stock's recent highs [5].

The deal is structured as a 50/50 split between cash and GameStop common stock. Financing hinges on three pillars: GameStop's approximately $9 billion cash reserve, a commitment letter from TD Bank for up to $20 billion in debt financing, and the possibility of support from external investors, including Middle Eastern sovereign wealth funds [1][6]. If completed, Cohen would serve as CEO of the combined entity [6].

The immediate question for eBay shareholders is whether GameStop stock — historically among the most volatile equities on U.S. exchanges — constitutes reliable consideration for half of a $55.5 billion transaction. Cohen has indicated he is prepared for a proxy fight and will take the offer directly to eBay shareholders if the board rejects it [1].

eBay's Turnaround by the Numbers

eBay's management has pointed to 2025 as a "milestone year." Annual revenue reached $11.1 billion, up 7.95% from $10.28 billion in 2024 [7]. Q4 2025 revenue was $3.0 billion, up 15% year-over-year, and GMV for Q4 hit $21.2 billion, up 10% on a reported basis [8]. Full-year 2025 GMV was approximately $79.6 billion, a 7% increase from 2024's $74.7 billion [9].

Source: eBay Investor Relations / Marketplace Pulse

Data as of Mar 1, 2026CSV

But context matters. eBay's GMV peaked at roughly $100 billion during the pandemic-fueled e-commerce surge of 2020. The 2025 figure of $79.6 billion remains 20% below that peak and below the pre-pandemic 2019 level of $85.5 billion [9]. Revenue in 2025, at $11.1 billion, only recently surpassed the $10.8 billion the company generated in 2019 when it still included certain operations it has since divested [10].

Source: eBay Investor Relations / MacroTrends

Data as of Mar 1, 2026CSV

Active buyers tell a similarly muted story. eBay reported 135 million active buyers at year-end 2025, up just 1% from 134 million a year earlier [11][9]. In Q1 2026, that figure inched to 136 million [9]. By comparison, the platform reported 182 million active buyers at its 2018 peak before the PayPal separation altered the counting methodology. Even under the current definition, growth has been effectively flat for years — less than 0.75% net new buyer growth annually, a figure GameStop itself cited in its offer letter [1].

Against competitors, eBay's scale remains substantial but its growth lags. Amazon's marketplace generated nearly $800 billion in GMV in 2024 [12]. Etsy, a more direct competitor in niche and secondhand goods, posted $11.92 billion in GMS for fiscal 2025, though that figure was itself declining [13]. Poshmark, now owned by South Korean conglomerate Naver, saw single-digit GMV growth [14].

The Enthusiast Strategy and Authenticity Guarantee

The strategic centerpiece of eBay's turnaround under CEO Jamie Iannone has been a pivot toward "enthusiast" verticals — categories where passionate collectors and hobbyists drive higher average order values and repeat purchases. Trading cards became the largest contributor to GMV growth in Q4 2024, with healthy double-digit volume increases [7]. Sneakers, watches, luxury handbags, and auto parts round out the focus categories.

The Authenticity Guarantee program, launched in 2020 for sneakers and since expanded to watches, trading cards, jewelry, and apparel, has been central to this strategy. eBay says it has authenticated more than 4 million shoes globally, with 14 pairs selling every minute [15]. The program addresses eBay's long-standing trust deficit relative to specialized platforms like StockX and GOAT by routing eligible items through physical authentication centers before delivery.

First-party advertising has emerged as another growth vector. eBay generated $455 million in ad revenue in Q2 2025 alone, up 19% year-over-year [16] — a high-margin business that boosts take rate without directly raising seller fees.

The question is how much of eBay's improvement reflects these strategic choices versus broader e-commerce tailwinds. The 2020 GMV spike was clearly pandemic-driven, and the subsequent decline coincided with a normalization across all online marketplaces. eBay's return to growth in 2024–2025 also coincided with a general recovery in U.S. consumer spending and a renewed interest in recommerce driven by inflation-conscious shoppers. Disentangling management execution from macro conditions is difficult with available data.

The Financial Engineering Question

Perhaps the most important question about eBay's turnaround is how much of it is real operating improvement and how much is the mechanical effect of massive share repurchases.

Source: MacroTrends / eBay Investor Relations

Data as of Mar 1, 2026CSV

The numbers are stark. eBay's diluted shares outstanding have fallen from roughly 815 million in 2019 to 456 million at the end of 2025 — a 44% reduction [17]. The company spent approximately $4.5 billion on buybacks in 2019, $4.3 billion in 2020, $6.9 billion in 2021, $3.1 billion in 2022, $1.4 billion in 2023, $3.1 billion in 2024, and $2.5 billion in 2025 [18]. That totals roughly $25.8 billion in share repurchases over seven years.

This buyback program has a direct mechanical effect on EPS. When a company reduces its share count by 44%, EPS rises even if net income is flat. eBay's diluted EPS for 2025 was $4.34, up from $3.94 in 2024 [17]. But revenue grew from $10.28 billion to $11.1 billion over that period — respectable, but far less dramatic than the per-share improvement would suggest when viewed in isolation.

As McKinsey has noted in research on share repurchases broadly, "EPS can be engineered; intrinsic value must be built," and "little of the correlation between total return to shareholders and EPS growth is due to share repurchases" [19]. The risk is that buyback-boosted EPS masks underlying stagnation — a concern amplified by eBay's flat active buyer count.

In December 2024, eBay's board authorized an additional $3 billion in buybacks [20], signaling that the strategy would continue. For a potential acquirer like GameStop, the question becomes: without the buyback tailwind, what does the underlying business trajectory look like?

Workforce Cuts and Their Downstream Effects

In January 2024, eBay laid off approximately 1,000 employees — about 9% of its full-time workforce [21]. This followed roughly 500 layoffs a year earlier [22]. CEO Iannone acknowledged at the time that "our overall headcount and expenses have outpaced the growth of our business" [23].

The cuts were broad, affecting category managers, software engineers, legal staff, PR, recruiting, and ad sales teams [24]. Category management is particularly relevant to sellers, as those teams oversee the rules, promotions, and curation for specific product verticals. The layoffs also reduced eBay's trust-and-safety and product development capacity at a time when the platform was simultaneously expanding authentication programs and rolling out AI-powered features.

Independent seller forums have reported mixed experiences. Some sellers note improvements in listing tools and search visibility driven by AI investments. Others point to slower response times from seller support and a perception that policy enforcement has become more automated and less nuanced. Comprehensive third-party fraud-rate data for eBay post-layoffs is not publicly available, making it difficult to quantify whether trust-and-safety has measurably deteriorated.

GameStop's offer letter specifically targeted eBay's $2.4 billion sales and marketing budget as bloated, promising $2 billion in annual cost cuts within a year [1]. Whether further headcount reductions at that scale could be absorbed without degrading the platform's operations is an open question.

Regulatory and Antitrust Considerations

Any deal of this magnitude would require clearance under the Hart-Scott-Rodino Antitrust Improvements Act in the United States, with potential additional scrutiny from the EU and UK competition authorities [4].

The antitrust picture is nuanced. GameStop and eBay operate in adjacent but not identical markets — GameStop is primarily a brick-and-mortar and online retailer of video games and collectibles, while eBay is a peer-to-peer and business-to-consumer marketplace spanning dozens of categories. The overlap is most significant in collectibles, trading cards, and gaming merchandise, precisely the verticals where eBay has concentrated its turnaround strategy.

Complicating matters, eBay's acquisitions of TCGPlayer (a leading trading card marketplace) and Goldin Auctions (a high-end collectibles auction house, acquired in 2024) already raised competition questions. A GameStop-eBay combination would consolidate further control over the collectibles and trading card market [25].

eBay also remains under a three-year enhanced compliance monitoring order tied to its 2024 deferred prosecution agreement with the Department of Justice, stemming from its employees' cyberstalking campaign against critics [25]. Whether this creates additional regulatory friction for a change-of-control transaction is unclear.

For precedent on timeline: Etsy's $1.6 billion acquisition of Depop closed in roughly three months in 2021, but that was a far smaller deal with less overlap. StubHub's spin-off from eBay to Viagogo took over a year to complete and faced significant regulatory challenges in multiple jurisdictions. A $55.5 billion marketplace combination would likely face a longer and more intensive review.

What Happens to Sellers Under New Ownership?

eBay hosts approximately 135 million active buyers and hundreds of thousands of small-business sellers who depend on the platform for their livelihoods [9]. A change of ownership raises practical concerns about fee structures, seller policies, and data practices.

Historical precedent from large marketplace acquisitions is limited but instructive. When private equity or strategic acquirers take control of platform businesses, fee increases within 12–24 months of closing are common. The acquirer needs to service acquisition debt and deliver returns — and the most direct lever available is the take rate charged to sellers on each transaction.

GameStop's stated plan to cut $2 billion in costs [1] would likely affect seller-facing services including customer support, dispute resolution, and promotional programs. Cohen's track record at Chewy — which he built into a dominant pet e-commerce platform before selling to PetSmart for $3.35 billion — suggests a preference for operational efficiency, but Chewy operated as a direct retailer, not a marketplace. Managing a two-sided marketplace with millions of independent sellers is a fundamentally different operational challenge.

Seller advocacy groups have not yet issued formal responses to the bid, and the compressed timeline since the May 3 announcement limits the available reaction. But the general concern among marketplace sellers in any acquisition scenario is predictable: higher fees, less favorable algorithms, and reduced support.

The Bull and Bear Cases

The bull case for the deal rests on Cohen's argument that eBay is undermanaged and underleveraged. GameStop's 1,600 retail stores could serve as physical nodes for authentication, intake, and fulfillment — creating an omnichannel capability that neither company has alone [1]. The combined entity would have meaningful scale in collectibles, recommerce, and enthusiast categories. If Cohen can replicate at eBay even a fraction of the operational improvements he drove at Chewy, the $125-per-share price could look like a bargain.

The bear case starts with execution risk. GameStop has never integrated an acquisition of this scale. The financing structure — dependent on $20 billion in bank debt and potentially sovereign wealth fund capital — creates significant leverage at a time of uncertain macroeconomic conditions. GameStop stock, which constitutes half the consideration, carries idiosyncratic volatility risk tied to meme-stock dynamics rather than business fundamentals. And eBay's underlying growth — flat buyers, declining GMV from peak, revenue only recently surpassing 2019 levels — suggests the turnaround may be less robust than headline numbers indicate.

The steelman critique of eBay's turnaround, independent of any deal, is straightforward: a company that has spent $25.8 billion on buybacks since 2019 while its active buyer count grew by roughly 1% and its GMV remains 20% below its 2020 peak is executing a capital return strategy, not a growth strategy. That distinction matters enormously for valuation. Capital return strategies are appropriate for mature, cash-generative businesses — and eBay may well be one — but they should be priced differently than growth stories.

What Comes Next

eBay's board has not publicly responded to GameStop's offer as of this writing. The company's options range from outright rejection to engagement, a strategic review, or solicitation of competing bids. Cohen's stated willingness to pursue a proxy fight means eBay shareholders may ultimately decide the question regardless of the board's preference [1].

For the broader e-commerce market, the bid raises a question that transcends this specific transaction: as online marketplaces mature and organic growth slows, is consolidation inevitable? eBay's trajectory — real but modest operating improvements amplified by aggressive financial engineering — may represent not a unique story but a template for how the next wave of platform M&A will be justified and contested.

The $55.5 billion question is whether Ryan Cohen is buying a turnaround or a buyback program — and whether he can tell the difference.