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GameStop CEO Ryan Cohen has bought nearly $47 million of the company’s shares this month. Investors will take that as a sign that he believes the stock is cheap. I think the more important question is what he believes investors are buying. The answer may no longer be GameStop’s stores.
At the end of its latest quarter, GameStop owned approximately $4.9 billion of eBay shares. That position was worth about 41% of GameStop’s recent $12 billion market value. It is large enough to influence earnings, reshape the balance sheet, and determine whether Cohen’s transformation of the company ultimately works.
GameStop began as a struggling retailer, became a meme stock, and then used the enthusiasm around its shares to raise billions of dollars. It has now reached a more serious stage. Cohen has invested much of that capital in a company he wants to acquire, leaving shareholders exposed to both the value of eBay and his ability to negotiate a deal.
I have been skeptical of GameStop before. In 2023, I warned that volatility, herd behavior and the lure of quick profits were replacing fundamental analysis. That criticism proved justified when attention itself became the investment case.
GameStop has since accumulated real assets, reduced expenses, and returned to profitability. Cohen has also committed a meaningful amount of his money. The company deserves a fresh assessment, but its valuation now requires investors to understand a large, concentrated wager on eBay.
Why GameStop Insider Buying Matters
Cohen purchased 1,150,680 GameStop shares on September 21 at an average price of $22.94, spending approximately $26.4 million. Earlier in the month, he bought another one million shares for roughly $20.4 million. He now directly owns approximately 40.5 million shares, equal to around 8% of GameStop’s outstanding stock. Directors Alain Attal, Lawrence Cheng, and James Grube have also recently bought shares.
I pay attention when insiders buy with their own money. Executives receive stock for many reasons, and they sell even more. An open-market purchase of this size removes much of that ambiguity. Cohen clearly believes the market is undervaluing what he is building.
Investors still must determine whether he is right. Insider buying is evidence of conviction, not evidence that an acquisition will earn an adequate return. Cohen can be fully aligned with shareholders and still misjudge eBay’s value, take on too much debt, or issue too many GameStop shares to complete the transaction.
His buying nevertheless changes the conversation. Cohen is asking shareholders to take a risk that he himself has avoided. The question is whether his personal exposure makes him more disciplined about the price of eBay or more determined to complete the deal.
GameStop’s Retail Recovery Has Limits
The latest quarter was stronger than many investors expected. Operating income reached $160.2 million, up from $66.4 million, marking the highest second-quarter operating income in GameStop’s history. Adjusted EBITDA increased to $174 million from $75.7 million, while selling, general, and administrative expenses fell to $187.1 million from $218.8 million.
Cohen deserves credit for making the business leaner. Years of store closures and expense reductions have removed much of the cost structure that once threatened to consume GameStop’s cash. Collectibles have also become a real business, with quarterly sales rising 57% to $356.3 million.
Collectibles now represent 45.1% of revenue, up from 23.4% a year earlier. GameStop is gradually replacing its dependence on physical video games with trading cards and other products that customers still want to buy in stores.
That improvement should not be dismissed, although it has come alongside a substantial decline in revenue. Quarterly sales fell nearly 19% to $790.2 million. Video game sales dropped to $263.2 million from $494.6 million.
The previous year benefited from the launch of the Nintendo Switch 2, and recent store closures and the disposal of the French business also affected the comparison. Even allowing for those factors, GameStop is producing better profits from a smaller company.
There is value in that, but cost cutting can only go so far. Future returns will depend on whether collectibles can keep growing and whether the remaining stores can maintain their profitability after the easiest savings have been captured.
The earnings also require some unpacking. GameStop reported net income of $298.7 million, compared with adjusted net income of $161.1 million. The company had already disclosed approximately $238 million of quarterly gains related to its eBay derivative and equity positions, partly offset by a loss of about $75 million on digital assets.
The retail operation improved substantially. At the same time, eBay contributed enough to make the reported result look considerably stronger. Investors now must value two sources of earnings that behave very differently.
eBay Now Sits Inside The GameStop Valuation
GameStop held approximately 43.4 million eBay shares at the end of the quarter, worth about $4.9 billion. The company reported $5.4 billion of cash, marketable securities, digital assets, and related receivables, which shows how dominant eBay has become within the liquid asset base.
The number I keep returning to is 41%. That is the approximate value of the eBay stake relative to GameStop’s recent market capitalization. On a per-share basis, the holding was worth roughly $9.70 for every GameStop share outstanding.
It is tempting to deduct that amount from the share price and conclude that the remaining GameStop business is available cheaply. I would be careful with that approach. The company still has approximately $2.8 billion of long-term debt, there may be taxes attached to investment gains, and future financing could dilute existing shareholders.
More importantly, Cohen does not appear to view the eBay shares as a passive investment. In May, GameStop offered to acquire eBay for $125 per share through a combination of cash and GameStop stock.
The proposal valued eBay’s equity at approximately $55.5 billion. GameStop said it had received a highly confident letter from TD Securities for as much as $20 billion of acquisition financing, and Cohen argued that the combined company could remove $2 billion of annual costs within 12 months.
eBay rejected the offer, describing it as neither credible nor attractive. Its board raised doubts about the financing, the effect on eBay’s strategy, and the proposed leadership of the combined company.
GameStop continued building its eBay position after the rejection. Cohen has therefore placed shareholders in an unusual situation: they have a large interest in a company that does not want to be acquired by them.
The eBay stake can create value without a takeover. A higher eBay share price would increase GameStop’s asset value and could produce further investment gains. Cohen could eventually sell the position, reduce debt, repurchase shares or redirect the capital elsewhere.
The greater risk is that he becomes committed to owning the entire company. GameStop is far smaller than eBay, and any completed transaction would require substantial financing and the issuance of new shares. The promised cost savings could be real, and the deal could still leave current shareholders worse off if the purchase price or financing terms absorb too much of the benefit.
That is the decision investors are underwriting. Does Cohen want eBay at a price that creates value, or does he just want eBay? The answer will matter far more than another quarter of store closures.
What Shareholders Need To Decide
When Roaring Kitty returned in 2024 and GameStop shares surged again, I wrote that investors were buying excitement without enough support from the underlying business. The company is in a stronger financial position today, but it still needs to separate enthusiasm from value.
Cohen has made meaningful progress. He has lowered expenses, improved profitability, built collectibles into a significant business, and turned a vulnerable balance sheet into a source of strategic flexibility. He has also concentrated on much of that flexibility in eBay. Investors are now relying on the judgment of one person across a shrinking retail operation, a multibillion-dollar public-equity position, and a takeover proposal that could transform the company.
The next quarterly earnings report will only answer part of the question. I would watch whether operating profits hold as revenue declines, whether collectibles continue taking a share of the old video-game business, and whether Cohen changes either the price or the financing structure of his eBay proposal.
The purchase price is especially important. Investors often become so focused on whether an acquisition can be completed that they forget to ask whether it should be completed on the available terms. Cohen’s recent purchases show that he is prepared to share the consequences, but ownership cannot turn a bad price into a good one.
GameStop shareholders are no longer betting mainly on a short squeeze or a miraculous recovery in physical video-game sales. They are betting that Ryan Cohen will treat the company’s capital with more discipline than the market expects. His $47 million of insider buying makes that wager more credible, while the $4.9 billion eBay position makes the consequences much larger.
GameStop may eventually prove that its meme-stock years financed one of the market’s more inventive corporate transformations. If Cohen overpays for eBay, those same years may instead be remembered as the moment GameStop raised billions from shareholders and placed too much of it behind one idea.

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