After a 28% drop in stock price, has the acquisition ambition shrunk? It is reported that GameStop CEO is considering abandoning the acquisition of eBay and shifting towards joint ventures and alliances

According to informed sources, Ryan Cohen, the CEO of GameStop (GME.US), is considering withdrawing the $56 billion acquisition offer for eBay Inc. (EBAY.US).

The sources stated that Cohen is contemplating proposing a partnership or joint venture instead, allowing eBay to leverage GameStop's resources from approximately 1,600 retail stores in the United States. This move could help both companies increase their market share in high-margin categories such as trading cards and collectibles.

The sources also added that as one of eBay's largest shareholders, GameStop would seek a seat on eBay's board if any form of collaboration is reached.

Since the acquisition offer was made in May, GameStop's stock price has fallen by 28%, while eBay's stock price has risen by 7.6%. The $125 per share acquisition offer consists of 50% cash and 50% GameStop common stock.

eBay's stock closed at $111.98 last Friday, with a market capitalization of approximately $49.8 billion. When accounting for debt, its enterprise value is close to $54 billion.

The sources indicated that GameStop has not made a final decision, and Cohen may still evaluate other alternatives. Currently, representatives from both GameStop and eBay have not been able to comment immediately.

This acquisition attempt is a bold move by Cohen—previously, GameStop had acquired a 5% stake in the much larger e-commerce company. GameStop continued to increase its holdings, and as of July 15, its stake had reached 9.75%, making it eBay's second-largest shareholder, second only to funds under Vanguard Group Inc.

Despite having $8.4 billion in cash available, GameStop's market value has shrunk to $8.6 billion.

Before this acquisition proposal, GameStop underwent a series of drastic changes. The video game retail chain has been continuously reducing its physical store footprint as players increasingly shift to online purchases of software.

In 2021, GameStop became the center of a retail investor frenzy. Michael Burry, head of Scion Asset Management—who gained fame for successfully shorting mortgages before the 2008 financial crisis—had a bullish stance on the stock around 2019, further fueling GameStop's surge.

However, after GameStop made the acquisition offer for eBay, Burry stated that he had liquidated all his holdings due to concerns that GameStop might take on too much debt to finance the deal.

Although eBay faces challenges in adapting to changing consumer preferences, its platform still boasts an annual transaction volume of approximately $80 billion. Over the 12 months ending March 31, around 136 million buyers completed purchases on the platform