- GameStop is trying to buy eBay and fans of the meme stock love the idea.
- Traders online cheered the notion that GameStop could become the next Berkshire Hathaway.
- The potential for dilution if the company has to issue more stock to fund the deal received some pushback.
GameStop CEO Ryan Cohen is a hero in meme-stock circles, and his bold plan for the video game retailer buy eBay has the support of a lot of day traders online.
GameStop announced an offer to buy eBay for $125 per share, or $56 billion. In an interview with CNBC on Monday, Cohen said that the company could issue more stock to finance the deal.
Even in the face of dilution, however, the investor army that powered the stock during the original meme crazy of the early pandemic is bullish on the idea and on Cohen's vision.
"Gameshire Hathebay"
Central to the bullishness of the diamond hands crowd is the idea that GameStop is on its way to becoming not just a purveyor of games and memorabilia, but an investment holding company akin to Berkshire Hathaway.
"Mark my words," one Reddit poster stated."THIS IS THE BEGINNING OF GAMESTOP HATHAWAY."
To which another replied simply: "Gameshire Hathebay."
The first poster added that they expect to see GameStop stock more than double from its current price to hit $50 by the end of this summer. The was down on Monday on the news, dipping by over 8%.
The Berkshire analogy has been pushed by prominent bulls recently, most notably Michael Burry, though the famed investor said on Monday that he's not optimistic about Cohen's move and that he plans to sell the stock.
Gamestop CEO Ryan Cohen on a CNBC interview
CNBC
For retail, though, especially those who have been holding since the early days of the original short squeeze, the eBay bid is a stroke of genius.
"With the loyal following of retail and all those HODLers that DSR .. their stock is being put to good use," another one wrote.
Their bullish sentiment is characteristic of other meme stock movements that have seen traders attach themselves to a leader who has taken a large position in a struggling company or who has a compelling thesis about why a stock is undervalued.
Previous examples include Keith Gill, aka Roaring Kitty, and his original bet on GameStop that kicked off the meme stock movement in 2021. Other more recent examples include Eric Jackson's bullish thesis on ibuyer OpenDoor Technologies, and a bullish day trader's bet on Beyond Meat that sent the stock soaring last year.
"I kinda like the memes and Ryan seems a more vicious businessman than I'll ever be," another Reddit user wrote. "If he controls my money I'm 100% okay with whatever."
The GameStop superfans said they have faith in Cohen because his pay package is tied to GameStop stock's performance. Given how much he has at stake, many retail traders expect him to make moves that would support the stock in the long term, even if that means diluting the value of their own positions in the near future.
Retail bears emerge
Not all retail traders are as optimistic. Some Redditors noted that they don't like the idea of GameStop issuing more shares, even if it makes the eBay acquisition possible.
"It still means me and you own less of the company every time it happens," one user noted. "Market cap is meaningless if share value doesn't increase."
Other users raised even stronger concern, sounding the alarm on what they see as a plan for Cohen to raise GameStop's market cap through artificial means, benefitting himself but not necessarily them.
"He is raising market cap by diluting shareholder value and taking on debt to increase market cap and EBITDA of GME," another added. "The definition of destroying shareholder value to get paid. It's not even a vague possibility….it's directly and openly what's happening."
The post What the meme-stock faithful are saying about GameStop's attempt to buy eBay appeared first on Business Insider
