Gamestop CEO Ryan Cohen on His Bid for eBay 5/4/26

0:00Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

0:30Trading at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos, and more. All curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need, so you can spend your time learning to trade brilliantly. Learn more at schwab.com slash trading. Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, GameStop's ambitious pitch to buy eBay for almost$56 billion.

1:14Yes, it is very unlikely. But a lot of things about the GameStop story was very unlikely. 100%. We attempt to add up the numbers for financing with GameStop CEO Ryan Cohen. Where's the rest of the money coming from? Andrew laid it out pretty clearly. I don't understand your question. We're offering half cash, half stock, and we have the ability to issue stock in order to get the deal done. But the full details of the offer are on our website. But you're on our air. We thought we'd get... I don't understand your question. Then OpenAI's many headlines this Monday. The Altman-Musk trial, new joint ventures, and a public listing on the horizon.

1:56the information's founder and editor-in-chief, Jessica Lesson. I think everyone's a little ahead of their skis on the timing of this IPO. Plus, the latest in Iran and a recap from the Berkshire Hathaway annual shareholder meeting over the weekend. Longtime CEO Warren Buffett was seated throughout in the very front row. Of course, it's the first time in 60 years he's been watching from the audience. It is Monday, May 4th, and Squawk Pod begins right now. Stand by in three, two, one. Cue it, please. Good morning and welcome to Squawk Box here on CNBC. I'm Melissa Lee along with Becky Quick and Mike Santoli.

2:37Becky is in Omaha, Nebraska, following Berkshire Hathaway's annual shareholder meeting. We'll get to the highlights in just a moment. Mike was there, too, by the way. Well, Saturday, as everybody knows, was the Berkshire Hathaway annual meeting right here in Omaha. Mike was here as well for the whole weekend. This was the first with the new CEO, Greg Abel, at the helm. He took the stage, offered a business update, took a lot of shareholder questions as well. Longtime CEO Warren Buffett was seated throughout in the very front row. Of course, it's the first time in 60 years he's been watching from the audience instead of up in stage.

3:09Notable attendees included actor Bill Murray, golfer Bryson DeChambeau, Apple CEO Tim Cook, who brought his name successor John Ternus. Also Buffett family members who were there throughout. Greg Abel took the stage a little after 9 a.m. Eastern time with a surprise for Warren Buffett. Asking everybody to look up as a jersey was raised inside the arena, retiring Buffett's number, as he said, number 60 was the number that they gave him on this. That's for the number of years that he was the CEO of Berkshire Hathaway. Also had a retirement jersey that they were putting up there for Charlie Munger, too.

3:4745 years that Munger served as vice chairman at Berkshire Hathaway. Abel spent more than an hour detailing the business operations of Berkshire and then moved to take those shareholder questions. He was joined on stage by a few of Berkshire managers throughout the morning, too. And the theme here was really focusing on performance across the company's vast holdings, telling the crowd that this is where he intends to focus. When it comes to allocating the time, yes, there's a certain amount of time spent on operations, and we'll prioritize that because we see a huge opportunity to continue to improve and close those gaps in operational excellence.

4:30We see opportunities within our existing portfolio, but that is either adding to them or right-sizing it, and then constantly evaluating what other opportunities are out there. That's something we heard here on Squawk Box Friday from lead director Sue Decker as well. Abel was also asked about the company's stock portfolio and his plans there. It's a very significant portion of our total investments are highly concentrated and sit across a limited portfolio. The active management of that is really limited, is really what I'm highlighting. We know those businesses well. We know the management teams.

5:15Those are the things that Warren and I would still be absolutely collaborating on and discussing. We don't have to discuss them every day, but if there's something going on across those businesses, we'd be discussing it that week or that month. And maybe it's where they're going or what we've learned. That answer was in response to a question about how he was going to be spending his time, because Greg Abel is a known operator compared to Warren Buffett, who was a stock picker through all that time. There's still a$300 billion stock portfolio. And Greg's position on that is, look, a lot of that is kind of self-run.

5:49You really don't have to worry about it as much. At least 200 billion dollars of it, he says, is stuff that's kind of on autopilot. Warren Buffett actually addressed the meeting right off the top as well. And he called out one of Berkshire's most successful investments. Ten years ago, we made a commitment to essentially move 10 percent of the resources of Berkshire Hathaway. we turned it over to another person who was not that well known at the time and we did that by spending roughly 35 billion dollars buying stock in Apple Corp. And we were going to have that under the management. We were turning that money over to the management, essentially, of Apple to make Berkshire look good.

6:55And without any work by us, which is our preferred way of operating. And I would like to report that 10 years later, several things are happening. One is the$35 billion counting dividends, realized appreciation, unrealized appreciation. But that has turned into$185 billion pre-tax.

7:34And I didn't have to do a damn thing. We also heard from a friend of Squawk Box and Berkshire shareholders since the 1970s, actor Bill Murray. He joined Mike and I in Saturday's live stream on CNBC.com. And he had some pretty interesting insight on what it might have been like for Warren Buffett to be watching the show from the audience instead of being on stage for the first time in 60 years. I was in a show once and for some reason I came late and my understudy went on in the show and I got to sit and watch our show. I was the only one of us that ever got to see our show and it was fantastic.

8:12I thought, God dang, this is really good. I was really happy to see that. So I think he's going to have that same experience of what it's like to be there as a shareholder and to see how the story goes down, how Greg tells the story. We asked Bill what show he was talking about. He said it was an off-Broadway production of National Lampoon or of Harvard Lampoon. And he said it was a production that he was in with his brother, Brian. He was there with Gilda Radner, Harold Ramis, John Belushi, and Paul Jacobs was on the piano. And he said, you know, kind of asked, did you do that often? He said, no, he only did it once and asked if he got in trouble about it.

8:53He said no, because it was just those guys. So they didn't get mad. But he said it was a fantastic show. And it was a really different feeling. And, Mike, I thought that was pretty good analogy for for what it might have been like for Warren Buffett sitting there, too. For sure. I mean, Bill had to show up the next day and actually do the job again. Warren gets to let Greg have the stage. It also occurred to me that, you know, what's it going to be for Lorne Michael's successor one day? If he ever gives up the reins after 51 years at SNL, Bill might have something to say about that as well. in corporate news this morning video game retailer gamestop making an offer to acquire ebay for 125 dollars per share in cash and stock it's about a 20 premium uh to friday's close for ebay the bid values ebay at close to 56 billion dollars in a statement gamestop says it has built a roughly five percent stake in ebay and secured a commitment letter from td bank for up to 20 billion dollars in debt financing.

9:48GameStop CEO Ryan Cohen telling the Wall Street Journal he sees a path to making eBay a much bigger competitor to Amazon. We're going to speak with Ryan Cohen in a can't miss interview. You know, look, obviously a long shot bid. It's a smaller competitor taking on a bigger one. We just saw it with Paramount and Warner Brothers Discovery. But interesting. I mean, it's not like the market's taking this as a foregone conclusion. And of course, we can talk about it, but there was a new compensation incentive plan for Ryan Cohen that's very tied to the total market cap of GameStop. If it gets past$100 billion, this would be kind of one big leap to get it very close in that direction.

10:26I would like to, though, put a little asterisk next to the sentence that you just uttered in terms of it being unlikely. Yes, it is very unlikely. But a lot of things about the GameStop story was very unlikely. 100%. Absolutely. So I feel like to discount the story too much would maybe be jumping to conclusions because Because we did see it come basically back from the dead in this meme stock mania that really helped GameStop raise all cash. And look, we're kind of back in that moment. I mean, we were talking about Avis budget. That was very 2021. So there's no doubt that there is a constituency of equity traders out there that's willing to hand money to Ryan Cohen through GameStop shares and maybe get that done.

11:06You know, eBay has actually had a little bit of a revival, but it's long been kind of a slow grower and past its peak days. The question is, do eBay shareholders really want GameStop stock, which is so volatile? And, you know, 50 percent of the bid, that's going to be a huge sort of roadblock. Guys, the only thing I would bring up with that is, you know, Elon Musk put that in vogue to tie your compensation and big jumps in compensation to a big jump in market cap, which makes complete sense because you are tying your performance to the shareholders' performance. But if you get to that market cap by swallowing another company, you know, you might look at that a little differently.

11:40It's not like the shareholders got the sort of gains that you would assume they would have gotten by tying your compensation to that. Yeah. And not only that, Becky, but once that threshold is met, if the compensation award is triggered, what it means is Warren Cohen gets a big old chunk of stock. So the rest of the investors get diluted out, you know, having gotten the market cap to that level. But, you know, we'll see. Obviously, the share price is going to determine whether this is this is something that has the endorsement of the market. Right. Just from a corporate governance, tying your your package, your compensation package, the CEO's compensation package to big jumps in the market cap.

12:17Generally, that would get a stamp of approval from corporate governance experts getting it. Maybe maybe there needs to be definitions of how you get to that market cap at some point, too, though, just to make sure that it truly does align with other shareholders. Yeah, I do think there are other provisions of the comp plan. So, you know, in every detail, I'm not quite sure. But it is interesting that that's that's the way to do it. And we'll see. I mean, you know, it is interesting how collectibles matters a lot, both for GameStop and eBay. Naturally, that's the linkage. Right. But be interested to see his rationale beyond that.

12:52Well, Iran's military warning U.S. forces to stay out of the Strait of Hormuz. That followed a message from President Trump saying the U.S. will help guide ships stuck in the Persian Gulf out of the Strait of Hormuz in an operation he calls Project Freedom. On True Social, the president said many ships were running low on food and supplies. He wrote, if in any way this humanitarian process is interfered with, that interference will unfortunately have to be dealt with forcefully. We do want to get to a turn that we're watching in futures as well as oil prices right now. Iran's Farce News Agency is reporting that a U.S.

13:26warship was turned back near Jask Island, near the Strait of Hormuz, this after it ignored Iran's warnings and was hit by two missiles. We were watching crude prices jump up pretty sharply. WTI up by 4.4 percent right now. 1.06 is the level there. Ice Brent up by 5 percent, 1.13. Futures meantime, we did see a drop immediately. We're off of the lows, off the back of that news. Now we're back to them. The S &P 500 down 37. Dow futures down by 347. The Nasdaq down 151. Of course, we'll continue to watch. But this is sort of the uncertainty, you know, about the Project Freedom operation that President Trump announced, getting the ships through the Strait of Hormuz.

14:04Nobody really knew what was going to happen. Iran had indicated that any sort of military action, any sort of escort would be a violation of the ceasefire agreement. So we didn't really know what was happening. And that's probably why we saw crude oil, you know, go lower at first, but then resume its path higher. For sure. And, you know, it's just going to test the market's ability, which it showed for a month, to kind of withstand a lot of the uncertainty about the Middle East and, you know, rely on things like semiconductors and the BitMag 7 to kind of insulate the market from a lot of the damage.

14:34Maybe we're at a high enough perch. We're going to have to give a little back and account for that. Yeah. Of course, we'll keep an eye on that. I want to just say, just on the headlines on this, I mean, this brings up a question that came up at the Berkshire Hathaway meeting this weekend as well. There's been this talk of who would be insuring the boats that go or the ships that go through the Strait of Hormuz. It's been a big question. And the U.S. obviously has tried to gather some of these insurers to make sure that there is a path for making sure you get the insurance because boats can't move without insurance.

15:02If they're afraid to go through, if you can't get insurance, they're not going to be moving through that strait. Ajit Jain, the vice chairman here at Berkshire, of Berkshire's insurance operation, was asked about that. Like, what would it take for Berkshire to be insuring any of these ships going through the straits? And his knee-jerk reaction was it depends on the price. Well, I will tell you with a situation like this, if this is true from these reports, again, this is Iranian state media, if this is true from these reports, the price of that insurance just went up drastically. He had pointed out that Berkshire had been in talks for it.

15:34There would be situations under which they would go along with it. It would have to be not only price, but the idea that the U.S. Navy was escorting those ships. To that point, he said they had not written any of that insurance. There are others who were. And Jane's point was that those are companies that have some excess cash that they feel like they want to put to work. But if this is true, the pricing on that insurance just went up drastically. Yeah, and unclear who will pay that at this point, Becky. We're going to keep an eye on the situation. Of course, we are seeing continued pressures here on the futures as well as oil.

16:11Cheese will be next. Coming up on Squawk Pod.

16:14Andrew Ross Sorkin:It is 4 a.m. in Los Angeles where I am. Andrew joins the crew for a can't-miss conversation. GameStop has proposed an acquisition of eBay, but the companies have not yet spoken to each other about it. That is not actually what we're hung up on. it's the financing that we're zeroing in on. GameStop CEO Ryan Cohen fields our questions on the funding. Yeah, we'll see what happens. I hear you. I understand that. I'm just trying to understand where the rest of the money would come from. It's half cash, half stock. I hear you. I'm just saying that that math doesn't get you to the price that you're offering.

16:57That interview is right after this. Your data lives everywhere. On-prem, in the cloud, across apps. Bring it all together with EverPure, the platform that acts like a living system, delivering the latest in data performance, security, and innovation without ever slowing you down. Sophisticated enough to anticipate your ever-changing data needs, yet simple enough to feel like second nature. Tame your data chaos with EverPure and make storage and data management the simplest part of your business. Visit everpuredata.com to learn more. Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time.

17:47So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

17:58Trading at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos, and more. All curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need, so you can spend your time learning to trade brilliantly. Learn more at schwab.com slash trading.

18:29Welcome back to Squawk Pod. Over the weekend, video game retailer GameStop announced it was making an unsolicited, non-binding offer to buy eBay at$125 a share. A deal valued at$55.5 billion and a stock price higher than eBay's as of Friday's close. The deal would be half cash and half stock, and GameStop has already built up a 5 % stake in eBay. Here's the rub. GameStop's market cap is around$11 billion. It's got a little over$9 billion on the balance sheet in cash. It secured a, quote, highly confident letter from TD, suggesting it could secure another$20 billion from TD. So the half-cash part of the proposed deal could be covered.

19:17But the half-stock, that's trickier. GameStop does not have, at this moment,$25 billion worth of stock. The only way to hit the number needed to satisfy the deal that GameStop itself proposed would be to issue more stock, massively diluting existing shareholder value. And even then, issuing more stock doesn't guarantee that the stock will be worth over$25 billion. Remember, GameStop has a famously volatile stock, TBT to the whole meme stock mania. It's worth noting Ryan Cohen's track record as CEO of GameStop. He joined the board in 2021, right after that short squeeze, and he started as CEO in 2023.

19:59Since then, he's put profit back on the company's P &L through cost cuts and store closures. Still, the financing of this proposed deal for eBay is a pickle, one our audience and our anchors picked up on. You are now caught up on GameStop's proposal. Here is Andrew Ross Sorkin.

20:19Andrew Ross Sorkin:The big deal news of the day, GameStop offering to buy eBay for$56 billion. The stocks are both up big in the last month in the pre-market. CEO Ryan Cohen saying that combined company will be a real competitor to Amazon. And joining us right now live and exclusively is the man himself, Ryan Cohen. Good morning and thank you for joining us. Morning. It's great to see you. So there's so many questions about how this would all work. But before we get to any of that, just give us the backstory here and the rationale behind wanting to go ahead and try to do this. eBay has the second largest commerce franchise, and there is a big opportunity to do something much larger and pull costs out of the system, as well as accelerate revenue growth and leveraging our physical infrastructure, our focus on collectibles.

21:22could be a much larger business. But bringing in an entrepreneurial mindset is what I plan on doing into eBay and building something much larger.

21:36Andrew Ross Sorkin:Okay, so you've built up a stake in this company already. You've had conversations with the company. You've tried. What's happened here? No. We're just starting. You're just starting. And and one of the questions I had was why not try to initiate conversations outside of the public sphere before putting this into a I don't know if we're putting in the context of hostile necessarily, but unsolicited, if you will. So for obvious reasons, eBay is a public company. There's all kinds of perverse financial incentives from the from the board to the management team. So there's only one way to approach something like this.

22:24Andrew Ross Sorkin:Invariably, the audience and I know a lot of people are going to ask, how does the math math for you, given the price tag, fifty six billion dollars, given the market cap of GameStop, which is a fraction of that. I know you have this$20 billion financing letter from TD, but sort of walk us through how you could get to that price and how it would work. It's on our website. It's half cash, half stock. But the details are on our website. Can you help? I've read them, but can you help our audience understand them? Yeah. Which part exactly? Well, I think we can start with the idea that the market cap of GameStop is, call it,$11 billion.

23:21Andrew Ross Sorkin:You have$9 billion on your balance sheet. arguably if you're providing effectively all of your stock. And then the cash that gets you to 20, you have this letter from TD. That's another 20. We're now at 40, but we're still off by, call it, 16. And the 20, as far as I understand, while it's considered a highly confident letter, meaning TD's saying they're highly confident that they would provide the financing, It's not locked financing. Yeah, we'll see what happens.

24:02Andrew Ross Sorkin:I hear you. I understand that. I'm just trying to understand where the rest of the money would come from. It's half cash, half stock. I hear you. I'm just saying that that math doesn't get you to the price that you're offering. That's a pretty straightforward question. I don't get it. Where's the rest of the money coming from? Andrew laid it out pretty clearly. I don't understand your question. We're offering half cash, half stock, and we have the ability to issue stock in order to get the deal done. But the full details of the offer are on our website. But you're on our air. We thought we'd get.

24:50I don't understand your question. So, Ryan, sorry, it's Melissa Liebek at the NASDAQ. Basically, you know, you've got$20 billion, presumably, from TD. You've got$9 billion of cash in your balance sheet. That's$29. Half cash, half stock. You might issue more shares. That's what you're talking about. So it could be dilutive to current GameStop shareholders. I want to move on, though, in terms of your vision for this combined company, because saying that a combined company could rival the likes of Amazon sets the bar pretty high. How do you foresee that happening, given some key differences between your model and Amazon's model?