Ryan Cohen is known as a maverick on Wall Street, admired by some for his operational acumen and savvy financial engineering.
But the rollout this week of his audacious proposal to merge GameStop, the video game retailer he runs, with the much larger eBay has befuddled even some of his biggest fans.
Even after days of poring over financial filings and parsing Mr. Cohen’s statements about the proposed deal, many market watchers still have big questions about the basic mechanics of how the takeover would work.
It started with his dizzying interview on CNBC on Monday in which he appeared flummoxed by fundamental questions — most notably how GameStop, a $12 billion company, would pay to merge with eBay, which is worth $46 billion. Rather than build support, the viral interview — which featured several awkward periods of silence as anchors tried to get the laconic executive to answer their questions — fueled more skepticism about the deal.
In later interviews with other outlets, Mr. Cohen was more forthcoming. He described a deal that sounded like a reverse merger, with significant contributions from eBay shareholders to form a combined company that he would run.
One high-profile investor, Michael Burry, announced that he had sold all his GameStop stock because he was worried about the debt Mr. Cohen was proposing to borrow for the deal.
“Suffice it to say, Cohen’s first attempt to sell this deal did not go smoothly,” wrote Don Bilson, head of event-driven research at Gordon Haskett.
Mr. Cohen often points to his well-worn track record of proving naysayers wrong. He founded the e-commerce company Chewy in 2011 and sold it to PetSmart for $3.2 billion. It went public in 2019 and is now worth around $10 billion.
He took over as chairman of the fledging game retailer GameStop in 2021 and, since then, has cut about $800 million in costs, bringing the company from a net loss of $381 million to a net profit of $418 million. That increase in profit came even as sales declined to about $3.6 billion from $6 billion over the same period. The business is still largely a traditional brick and mortar retailer for gamers, though it has shifted to more profitable lines of business, like trading cards and collectibles.
Mr. Cohen’s run at GameStop has also turned him into a meme king, as retail traders piled into the company’s once beaten-down stock, helping to raise its value.
He has cashed in on his popularity among retail investors. Through a number of “at-the-market” offerings, Mr. Cohen issued and sold new shares to GameStop’s enthusiastic investors, putting those proceeds toward the $10 billion cash pile he now wants to use for the eBay bid.
At other times, his track record delivering for investors has been rocky. Five months after he revealed a 10 percent stake in Bed Bath & Beyond in March 2022, sending shares up as much as 70 percent, he disclosed that he had sold it. The company’s shares plummeted, and Bed Bath & Beyond filed for bankruptcy the following April.
In February 2023, Mr. Cohen took a stake in Nordstrom, saying he wanted to make changes to its board, despite the fact the company was already controlled by its founding family. By April, he had halted his efforts.
In his CNBC interview, Mr. Cohen leaned on his past successes as an operator. “Look at our financial performance,” he told the anchors about his run at GameStop. “Is it better than you guys anticipated? Because you guys said it was going to be doing really, really poorly.”
But when pressed on how GameStop could afford eBay, he stated repeatedly it would be a half cash and half stock offer, without elaborating.
Some of Mr. Cohen’s supporters defended his bid — and the interview.
“The guy’s got a track record of being very successful,” said Anthony Pompliano, the entrepreneur and investor. “People look at that and they’re like, oh, this is clown-town. But I actually think that if you look at it through the lens of, he is specifically communicating to a retail audience that he needs to energize to make this happen, that interview couldn’t have gone better for him.”
The share prices of the two companies reflect a broader skepticism of the deal.
Shares of GameStop are down about 6 percent since word of the deal leaked out Friday afternoon. EBay’s stock price is trading roughly 14 percent below the $125 a share Mr. Cohen has offered for the company, a reflection of the doubts among investors about the deal getting done as envisioned.
Another complicating matter may be the letter Mr. Cohen says he has from TD Bank noting it is “highly confident” it will raise $20 billion to finance the offer. The letter is not binding, and it notes that its confidence rests, in part, on the assumption that the combined company would be investment grade, two people familiar with the deal said. While such language is typical of commitment letters in early-stage deal talks, it is also an indication of how tentative the financing remains.
Mr. Cohen told the chat show TBPN on Tuesday that he does not want to run a deeply indebted business, and his intention is to rapidly repay debt.
“TD’s basically reserving a seat on the first escape pod,” Eric Talley, a professor at Columbia Law School, said.
The credit ratings agency Moody’s said Tuesday that the proposed deal would be “credit negative,” noting it would balloon eBay’s debt from $7 billion to $31 billion.
Some of the financing risks could be mitigated if Mr. Cohen achieves his stated goal of slashing about $2 billion in costs within the first 12 months of closing. Unlike a traditional merger, these cuts would not come from savings in combining operations. Instead, Mr. Cohen has said he would cut spending on things like sales and marketing, replicating the sorts of efficiencies he found at GameStop.
Mr. Cohen’s cost-cutting track record was not enough to appease the investor Mr. Burry, who said in a Substack post on Monday that he had sold the entirety of his GameStop stake in large part because he worries about the amount of debt involved in the deal.
“Never confuse debt for creativity,” he wrote.
As doubts mounted, Mr. Cohen did a second a round of press on Tuesday. In an interview with Fox Business, he explained that eBay shareholders would exchange about half their eBay shares for shares in the combined company, likely providing them with majority ownership of the new entity. He argued they would want to do that in part to benefit from his acumen as an operator.
But that arrangement could prove a tough sell for eBay shareholders. Shares of eBay are up 24 percent year to date since the e-commerce company successfully pivoted its business to younger consumers. Mixing those shares in with GameStop shares, which have had a more volatile history, could be a risk they aren’t willing to take.
The Fox Business interviewer, who said he was a GameStop shareholder, later asked Mr. Cohen about the dubious reception to his unconventional promotional tour so far.
“There always needs to be a healthy dose of skepticism,” Mr. Cohen replied.
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
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