GameStop (GME) was the poster boy of the meme stock rally in 2021, but when the craze fizzled out, shares began to witness an extended period of downtrend. In the last 52 weeks, GME stock has declined by roughly 21%.
Amidst the stock grind, however, GameStop recently submitted a non-binding proposal to acquire eBay (EBAY) at $125 per share in cash and stock. At the time of announcement, the offer implied a 46% premium to the closing price of EBAY stock. The news triggered a mixed reaction among market participants with concerns related to the credit stress on GameStop.
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Deal Structure and Impact on Credit
In the proposal, GameStop announced that the 50% cash part of the acquisition would be funded through its cash buffer and external financing. However, the company’s cash buffer of $9.4 billion (including liquid investments) implies additional acquisition financing of $20 billion.
Accordingly, Moody’s reports that the proposed transaction would result in a “material increase in debt and leverage.” On a standalone basis, eBay’s total debt was $7.2 billion at the end of 2025, while GameStop has outstanding debt of $4.2 billion. Combined with the $20 billion in acquisition financing, total debt would swell to $31.4 billion for the combined entity.
Moody’s also noted that the interest expense on new debt would likely be over $1 billion. Therefore, it seems unlikely that the combined entity would have an investment-grade credit rating. This impacts the chances that the potential acquisition is actually completed.
Finally, it’s worth noting that GameStop believes that $2 billion in annualized cost reduction is likely within 12 months of closing the acquisition. This target is optimistic, and any deviation from the potential synergies would imply a further worsening of the company’s credit health.
About GameStop Stock
Headquartered in Grapevine, Texas, GameStop is a specialty retailer offering games, collectibles, and entertainment products through its stores and e-commerce platforms. As of January 2026, the company operated 2,206 stores, with 1,598 stores in the United States, 308 in Europe, and 300 in Australia.
For fiscal 2025, GameStop reported revenue of $3.63 billion, down 5% year-over-year (YOY). For the same period, however, the firm reported operating income of $232.1 million. The company’s decline in revenue but improvement in operating margin came on the back of 727 store closures in 2025. While the headline numbers were unattractive, GameStop ended 2025 with a cash buffer of $9 billion.
