Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: One of the biggest potential deals in technology is game
Speaker 2: Stop's attempt to buy eBay. In May, the video game
Speaker 2: retailer and it's CEO Ryan Cohen, launched an unsolicited fifty
Speaker 2: six billion dollar bid for the e commerce platform. eBay
Speaker 2: rejected the offer, calling it neither credible nor attractive. Since then,
Speaker 2: Cohen has scrapped a controversial multi billion dollar pay package,
Speaker 2: and game Stop shareholders have approved increasing the company's authorized sharecount,
Speaker 2: giving it more flexibility to pursue strategic transaction. So where
Speaker 2: does the deal stand now? Ryan Cohen joins us on
Speaker 2: Bloomberg Television and Radio. Right, thank you for your time,
Speaker 2: and good morning, welcome to Bloomberg Tech. On the long
Speaker 2: list of things that have happened since May, our audience
Speaker 2: just has a very simple question, forew which is what's changed,
Speaker 2: what's developed in that period of time.
Speaker 3: There has been a complete failure by the media to
Speaker 3: explain why this transaction makes sense. And so number one,
Speaker 3: my track record chewing in game Stop, it speaks for themselves,
Speaker 3: my alignment with shareholders.
Speaker 4: I'm putting five.
Speaker 3: Hundred million dollars of my own money into the transaction,
Speaker 3: the high margin growth opportunities for this business within live commerce,
Speaker 3: which company has not been doing well, and using game
Speaker 3: stop stores as nodes for both the marketplace and live
Speaker 3: commerce is huge because the business today in live commerce
Speaker 3: is tiny.
Speaker 4: And then building out a.
Speaker 3: Digital marketplace for in game items, those are just like
Speaker 3: some of the high growth opportunities within the business. And
Speaker 3: then there is the cost takeout opportunity. I've committed to
Speaker 3: taking out two billion dollars within the first year, and
Speaker 3: that's just the beginning. So this whole narrative that the
Speaker 3: business is going to be too leveraged is a fantasy
Speaker 3: invented by the media and it's just simply in our trill.
Speaker 2: On the banking side, let's go there. You lined up
Speaker 2: some banking support, right, and I think that one of
Speaker 2: the concerns that Moody's put out there as an example
Speaker 2: was the credit rating and the credit worthiness of the
Speaker 2: combined entity. So again another question from the audience is
Speaker 2: explain the banking support that you've secured since May, but
Speaker 2: also that concern that the debt component of it, what
Speaker 2: the credit negative outlook would be for a combined entity
Speaker 2: based on the plan that you just outlined.
Speaker 4: We have a highly confident letter from our bankers.
Speaker 3: We have a lot of party that are interested in
Speaker 3: this transaction, and the most important thing ultimately, if we
Speaker 3: can't get the debt, then it means that eBay can't
Speaker 3: get the debt, and eBay can get the debt, so
Speaker 3: its entire narrative is simply not trill.
Speaker 2: I didn't explain that question very well, Ryan, if I'm
Speaker 2: self reflective honest about it, So I'm just going to
Speaker 2: go back to it. Your financing letter is from TD right,
Speaker 2: and it was widely reported to depend on the combined
Speaker 2: company maintaining investment grade credit rating, and then Moodies came
Speaker 2: out and said that this deal would be credit negative
Speaker 2: for the combined company. Have you taken steps to address that.
Speaker 3: Nobody has reached out to us, including the credit agencies,
Speaker 3: but the pro forma company is going to be investment grade.
Speaker 2: We talked to the beginning of the conversation about now
Speaker 2: shareholders improving, increasing sorry the company's authorized share count. Does
Speaker 2: that allow you to do something new that you couldn't
Speaker 2: have otherwise done in the context of the eBay deal.
Speaker 4: Yeah, I mean yes it does.
Speaker 1: And what would that be.
Speaker 3: By the business by eBay.
Speaker 2: Are posted on x that you were coming on the show,
Speaker 2: and you know, in the context of what you've done
Speaker 2: with financial mechanics of late, you know, the question that
Speaker 2: existing games Stop shareholders sent me over and over again is,
Speaker 2: you know, you're asking them to accept pretty significant dilution,
Speaker 2: and they're basically asking, like, what's the payoff for them
Speaker 2: in accepting that dilution.
Speaker 4: There's different forms of dilution.
Speaker 3: Most dilution is dilutive to shareholders. When you're buying a
Speaker 3: business and I've committed to pulling two billion dollars.
Speaker 4: Of costs out. So if you do the math and.
Speaker 3: Buying a business for fifty six billion, and the business
Speaker 3: is forecasted to make over three and a half billion,
Speaker 3: that's the consensus for twenty twenty six plus what I
Speaker 3: would be pulling out in costs, so you're at over
Speaker 3: five and a half billion of ebadah, and then the
Speaker 3: ability to take this platform and build a much much
Speaker 3: larger business.
Speaker 4: The upside is huge.
Speaker 3: So I wouldn't go and buy a business if I
Speaker 3: didn't think I can take it from fifty six billion
Speaker 3: and turn it into multiples larger.
Speaker 4: So it's a creative to shareholders.
Speaker 3: But most of the time when companies are issuing shares,
Speaker 3: it's dilutive and earnings per share goes down. In this case,
Speaker 3: it's a different story. But most of the time you
Speaker 3: have management teams. A good example is this company that
Speaker 3: collect tons of risk free compensation and they're not aligned
Speaker 3: with shareholders.
Speaker 4: In this case, that's not the case.
Speaker 2: You had the letter from TD you said earlier you
Speaker 2: were going to put five hundred million dollars of your
Speaker 2: own money into this transaction. Outside of that, Is there
Speaker 2: any other financing support, any other parties that since mid
Speaker 2: May you've pulled into it.
Speaker 3: We've had a lot of parties come to us, and
Speaker 3: there's been a lot of interest from the capital markets.
Speaker 2: We're live on Bloomberg Television and Bloomberg Radio with Ryan Cohen,
Speaker 2: the CEO of game Stop. We're talking about Ryan and
Speaker 2: gamestopspid to buy eBay. Really simple question. Has anyone from eBay,
Speaker 2: the management team or the board reached back out to
Speaker 2: you or responded to you in this inter in period.
Speaker 3: No.
Speaker 4: I hope they do, but.
Speaker 3: They're entrenched and they're hiding behind their advisors.
Speaker 2: If I go to Teddy dot com on any browser,
Speaker 2: I'm diverted back to gamestock dot com.
Speaker 3: Why I'm focused on game Stop.
Speaker 2: The roost of the question is, let's say that you
Speaker 2: proceed with this. There's a very wide range of opinion speculation. Basically,
Speaker 2: why does Ryan Cohen want to buy eBay? At one
Speaker 2: extreme is the idea that you just want to be
Speaker 2: the CEO of eBay rather than GameStop. At the other
Speaker 2: end is the idea that you have a bigger plan,
Speaker 2: a master plan. You kind of talked about it a
Speaker 2: little bit earlier, but what's the reality here? What is
Speaker 2: the bigger picture for a combined entity? Or referencing Teddy
Speaker 2: dot com, there's some history there, but a sort of
Speaker 2: can conglomerate. It's a holding company.
Speaker 3: eBay is a platform that I can build into something
Speaker 3: much more profitable and much larger. The ability to take
Speaker 3: game stop stores and our experience in gaming and refurbished
Speaker 3: tech and collectibles combined with eBay and be a leader
Speaker 3: in live commerce, build out an in game digital marketplace,
Speaker 3: use the stores for the same day authentication, and ultimately
Speaker 3: pull down pull out significant costs, and none of these
Speaker 3: things come at the expense of growth. It's actually the opposite.
Speaker 3: The more efficient you get, the easier it is to grow.
Speaker 3: It makes too much sense. So that's why I want
Speaker 3: to business. That's why I want to buy it. It's
Speaker 3: not that complicated. There is such overlap between the businesses,
Speaker 3: and my experience is in e commerce.
Speaker 1: Right, are you prepared to improve the offer?
Speaker 4: Ryan, I'm not going to negotiate against myself, but.
Speaker 1: That might be what it takes.
Speaker 4: We'll see what happens ed.
Speaker 2: You've talked about this a little bit recently. A lot
Speaker 2: of people point out to me you've done a number
Speaker 2: of interviews in quick succession, Right what happens to eBay
Speaker 2: just keeps saying.
Speaker 1: No.
Speaker 3: Ultimately, it's going to be the owners of the business
Speaker 3: that are going to decide who's more competent, who's more
Speaker 3: aligned with shareholders, and who's more capable of building a much,
Speaker 3: much larger business. So the management team can only aide
Speaker 3: for so long. And I would love for this to
Speaker 3: be a collaborative process and a consensual that's my preference,
Speaker 3: that's number one. But if that doesn't happen, then it's
Speaker 3: going to be shareholders' decision because they're the owners of
Speaker 3: the business.
Speaker 1: Right.
Speaker 2: I do want to talk a lot more about the
Speaker 2: game Stop business, a lot more about eBay, and we're
Speaker 2: going to take a break and come back and do
Speaker 2: that talk about what's really happening. I have a final
Speaker 2: question from the audience that I promised I would put
Speaker 2: to you, and it's from game Stop shareholders. A lot
Speaker 2: of game Stop shareholders have asked about the warrants that
Speaker 2: expire in October. You know, another recent or relatively recent
Speaker 2: financial tracks action from the company. What should they expect
Speaker 2: happens with those warrants between now in October of this year.
Speaker 4: I don't have a crystal wall. I can't answer that question.
Speaker 2: Okay, their expectation is that when they expire, I think
Speaker 2: the date over twenty six is that's the outcome.
Speaker 3: Ed people that have invested alongside me when it comes
Speaker 3: to or a game stop and me committing five hundred
Speaker 3: million dollars into eBay, they've done They've done very very well.
Speaker 4: So I don't have a crystal ball.
Speaker 3: I can't predict the future, nor can anyone that I've
Speaker 3: ever met.
Speaker 4: But GameStop is a business that.
Speaker 3: Was on the brink of bankruptcy and everybody was betting
Speaker 3: against it for a good reason, and now the company
Speaker 3: is making more money than it's ever made in its history.
Speaker 2: Ryan Cohen, CEO game Stop, you're sticking around, We're going
Speaker 2: to take a break and then we're going to talk
Speaker 2: about that business, GameStop and what it's doing.
Speaker 1: We'll be right back. This is Bloomberg Tech.
Speaker 2: Okay, we're live on Bloomberg Tech with GameStop CEO Ryan Cohen.
Speaker 2: Let's put the eBay deal potential deal aside for a moment.
Speaker 2: Whatever happens with eBay. Game stops so one of the
Speaker 2: biggest names in gaming. I get a lot of questions
Speaker 2: about that, and Ryan, if you're up for it, let's
Speaker 2: start with Grand Theft Auto six. You know it's expected
Speaker 2: to be one of the biggest entertainment launches ever. You
Speaker 2: go to GameStop dot com, pre orders are available. What
Speaker 2: are you seeing? What a customer is telling you?
Speaker 3: Ed, I want to go back and talk about eBay.
Speaker 3: I want to know if you wanted to build, if
Speaker 3: you wanted to build the trillion dollar.
Speaker 4: Business, and.
Speaker 3: You had the existing management team. Guy running the company
Speaker 3: makes thirty million bucks a year, hasn't bought a single
Speaker 3: share in the open market, and then you have someone
Speaker 3: that's committed five hundred million might me, So we don't
Speaker 3: have to talk in hypotheticals. Who's more competent and capable
Speaker 3: of building a larger business. I want you to look
Speaker 3: at your viewers in the eyes and tell them, are
Speaker 3: you going to bet on an entrench management team running
Speaker 3: the business or me someone I went head to head
Speaker 3: against Amazon selling thirty pound bags of dog food, turned
Speaker 3: around a very tough situation at GameStop, and now the
Speaker 3: company is making lots of money.
Speaker 4: I really want to know your opinion, Ryan.
Speaker 2: I'm not gonna I'm not here to answer the question.
Speaker 2: The audience doesn't care what I think about this deal.
Speaker 2: They're here for you. But the link to grand theft
Speaker 2: Auto six for what it's worth. GameStop has twenty two
Speaker 2: hundred stores across the jurisdictions it operates in. Right, it
Speaker 2: sells hardware, video games, consoles that are going discless at
Speaker 2: some point you need to hire people for those stores.
Speaker 2: People are looking at what they know about the proposed
Speaker 2: structure of this deal that's on the table and trying
Speaker 2: to understand, in part what we talked about earlier, right,
Speaker 2: taking the costs out of the combined business, to understand
Speaker 2: what the plan is here, what the master plan is
Speaker 2: for the combined entity.
Speaker 1: So let's go with that.
Speaker 2: Like, what is the synergistic play here between eBay, the
Speaker 2: eco moss business, and GameStop, which right now is a
Speaker 2: brick and mortar business selling video games, consoles, collectibles.
Speaker 4: We're going to unlock live commerce.
Speaker 3: We're going to use the stores for same day authentication.
Speaker 3: I'll give you an example. Let's just talk about trading
Speaker 3: cards right now. Right the biggest mast shoe on eBay
Speaker 3: is fraud. So they've done really well on authenticity guarantee
Speaker 3: because you know, when you buy an item now and
Speaker 3: it's got the AG.
Speaker 4: Certification, it's legit.
Speaker 3: It's going through a centralized model right now, so the
Speaker 3: sellers shipping it costs a lot of money. There's a
Speaker 3: few fulfillment centers, take some time, and then it goes
Speaker 3: to the buyer can ultimately go Once these businesses are together,
Speaker 3: we've got sixteen hundred nodes.
Speaker 4: They're within a fifteen minute.
Speaker 3: Drive of eighty percent of the population, and you can
Speaker 3: authenticate the item same day for cheaper.
Speaker 4: So that's just one item. Live commerce, the business is
Speaker 4: getting smoked.
Speaker 3: Live commerce is a trillion dollar addressable market it's really
Speaker 3: really big in Asia. There's some competitors in the US
Speaker 3: that are doing very very well. eBay is not doing
Speaker 3: very well. So the ability to go and use our
Speaker 3: nodes for as studios and as fulfillment and logistics for
Speaker 3: content creators is huge. And then we have a bit
Speaker 3: of experience in gaming when it comes to the buy
Speaker 3: trade and someone by the buy selling trade model. So
Speaker 3: the ability for us to use eBay's rails to build
Speaker 3: out an in game digital marketplace is huge. So those
Speaker 3: are just some of the opportunities to take this business
Speaker 3: and build it into something that the existing management team
Speaker 3: on a standalone basis can never do.
Speaker 2: So the situation is collectibles are clearly a central part
Speaker 2: of the plan. Right If this deal goes through the
Speaker 2: Combined entity on gaming, it sounds like you are preparing
Speaker 2: for a world where gaming is discless. There will be
Speaker 2: a trade in secondhand trade in but that this is
Speaker 2: the umbrella point, right Like if the hardware makers Sony
Speaker 2: Xbox are reportedly moving to diskless on the console side,
Speaker 2: future game launches are digital only. Where does that fit
Speaker 2: in for your business plan and the combined entity?
Speaker 4: It doesn't matter.
Speaker 3: It doesn't matter at all software It mattered in the past.
Speaker 3: Software today makes up less than twelve percent of the
Speaker 3: business and collectibles makes up over half the business, So
Speaker 3: it's totally totally irrelevant.
Speaker 2: Is there anything that you learned from the NFT marketplace
Speaker 2: experiment a game Stop that you you think you can
Speaker 2: put into practice if the deal goes through in this
Speaker 2: combined entity.
Speaker 1: What was the takeaway for you from that?
Speaker 4: What does that mean?
Speaker 1: Game Stop has looked at.
Speaker 2: Digital business lines outside of the physical world. What did
Speaker 2: you learn from game Stop looking at those markets?
Speaker 4: Do you know how much money game Stop is making today?
Speaker 1: Please?
Speaker 3: One hundred and forty three million in Q one buyer
Speaker 3: stop braining earnings in the company's history.
Speaker 1: There was surprise at the strength of earnings recently. But again,
Speaker 1: you know the audience.
Speaker 3: Does everybody in the everybody in the media wants game
Speaker 3: Stop to fail?
Speaker 4: Explain that to me ed?
Speaker 3: Why everybody in the media, in the mainstream media wants
Speaker 3: game Stop to fail? You've got there's nothing more American
Speaker 3: then game Stop committing its balance sheet and this company,
Speaker 3: which is a great American company, eBay being aligned with shareholders,
Speaker 3: that's how this country was built. Is risking your own capital,
Speaker 3: and if the business succeeds, you make money, and if
Speaker 3: the business fails, you'll lose a lot of money. And
Speaker 3: what I want to understand is why everybody wants Game.
Speaker 4: Stop to fail. Both it's core business and in this transaction.
Speaker 3: What world do we live in where we're betting against
Speaker 3: We're we're rooting for the an entrenched management team that
Speaker 3: has no skin in the game and someone that's risking
Speaker 3: their own capital. And there's nothing more American than that
Speaker 3: you want us to fail. I want to understand that.
Speaker 1: Ryan, I'm a technology journalist. I host the Tech show
Speaker 1: on Bloomberg.
Speaker 2: When this deal broke in May, I my team invited
Speaker 2: you onto the show, and it took a number of months.
Speaker 2: You're now here on the show, and in advance of
Speaker 2: you coming on the show, I posted on social media
Speaker 2: that you were coming on the show. I always give
Speaker 2: our audience opportunity to ask their questions. That's what we're
Speaker 2: doing here, giving you an opportunity to present. I think
Speaker 2: that the one outstanding thing is people asking when will
Speaker 2: they see a sort of codified plan from you, a
Speaker 2: business plan presented for this combined entity.
Speaker 1: On paper.
Speaker 2: You've explained a bit of it in the course of
Speaker 2: this conversation. But that's why the audience is here to
Speaker 2: listen to you to explain the future of a business
Speaker 2: that is a combination of gamestot and eBay.
Speaker 3: I'm going to bring that plan directly to shareholders. It's
Speaker 3: not going to be through a TV show.
Speaker 4: You can count on it. It's going to be directly
Speaker 4: to shareholders.
Speaker 1: And do you have a timeline for that, Ryan.
Speaker 3: We've had an in of parties that have come to
Speaker 3: USK and they're interested.
Speaker 4: In due course, the plan is going to be made public, but.
Speaker 1: In the shortest plan and also.
Speaker 3: Building a much larger business. I mean, you know, what
Speaker 3: is the goal of business?
Speaker 4: What is my goal?
Speaker 3: I own a lot of stock and I don't have
Speaker 3: any perverse incentives, so it's to make the business a
Speaker 3: lot more profitable and to maximize shareholder value.
Speaker 4: So that's the plan. It's not that complicated.
Speaker 3: And I've spoken about huge growth areas within cutting costs.
Speaker 3: That's just short term, but live commerce and building out
Speaker 3: an in game digital marketplace. So I've shared that with you,
Speaker 3: But everyone in the past have said, what's the business plan?
Speaker 4: What's the business plan?
Speaker 3: But they only do that with game Stop for whatever reason. Well,
Speaker 3: you know what the business plan is to make money.
Speaker 3: Game Stop just reported its highest earnings in the company's
Speaker 3: history with a fraction of the stores, and everybody in
Speaker 3: the media said GameStop was going to fail.
Speaker 4: So the plan is to make more money.
Speaker 3: The plan is to maximize shareholder value. Am I going
Speaker 3: to go and share my proprietary plan and every single
Speaker 3: detail and give it out to my competitors.
Speaker 4: That'd be a pretty stupid thing to do.
Speaker 2: Ryan, We have literally thirty seconds left in the show. Again,
Speaker 2: are you prepared to raise your offer for eBay? You
Speaker 2: set out your vision, but the action you're willing to
Speaker 2: take to do it.
Speaker 3: I'm not going to call my shots, but we're coming
Speaker 3: for eBay one way or another.
Speaker 2: Ryan Cohen, CEO of GameStop, and extended conversation on Bloomberg Tech.
Speaker 1: Thank you for your time.