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Well, boys and girls, we are back. That is because GameStop is in the news and there is no way we can talk about what the heck just happened with Ryan Cohen and GameStop without pressing these two buttons. One and two. That's okay. I am with you. Here we go. Come on. Push it. Buy the dip. Buy the dip.
Here we go. Got to love it. Got to love the throwback. Anyway, this is a breaking news. We've got some analysis here. What we're going to do in this video is we're going to break down what just happened in the news. We're going to break down what the valuation and fundamentals look like for both GameStop and eBay.
And I'm going to give you some insight into a company that I actually think might strategically be a better buy for the company at a better valuation, but doesn't necessarily align with Ryan Cohen's stock comp plan. So, first things first, front page news, Wall Street Journal, GameStop preparing to make an offer for eBay.
This is a GameStop is preparing to make an offer for eBay according to people familiar with the matter. CEO Ryan Cohen's audacious plan to turn the retailer into a $100 billion juggernaut. Now, GameStop market value at about $11 billion, whereas eBay sits at about $40 billion. Keep in mind, GameStop is trading very, very close to its cash value.
They do have some long-term debt though that you'd have to back off, but they're not really trading uh for that much of a premium above cash. And I'll I'll show you that calculation in just a moment. But, let's first go through some of the initial goals here. You know, back in January, Ryan Cohen did talk about this idea that he could take some kind of stake in a quote consumer or retail stock.
And this was a Wall Street Journal article that we had here. The GameStop CEO has an audacious plan to clinch his $35 billion stock comp plan. So, basically, if he is able to essentially 10x the value of GameStop, they didn't necessarily say free and clear of debt, just get it to trade for that, which might be why he's looking for a big company to sort of absorb, even if it includes a lot of debt, and then you sort of meme squeeze it up to 100.
Uh you know, maybe maybe the co-founder of Chewy can pull it off that way and bag his stock comp. Uh Anyway, uh so, the exciting thing here is what's going on? What does he see at eBay, and how what kind of synergies could there be between these two deals? Uh and so, what kind of valuations are we looking at these?
How is GameStop even going to pull this off? And is Ryan going to get his stock comp before they expire? Now, he's got plenty of time for them to expire. They don't actually expire until like 2036, I'm pretty sure. Uh and even after he if he got his $35 billion stock comp, he'd still have to hold the stocks for 2 years, so he can't dump them immediately.
And uh he these are tranches comps, uh which do correspond not just to market value, but also some EBITDA hurdles. So, you know, he's it's a vested comp plan. He's trying to put this company together and actually grow it on both ends, whether it's with eBay or without. So, let's talk about this. The first thing that we're going to do is we're going to go look at GameStop fundamentals.
So, we'll go to the GameStop earnings call. Let's just understand quickly what's going on with the business. GameStop has started cash flowing more. They went from basically no cash flow in '23 to some cash flow in 2024 to almost half a billion dollars of cash flow, uh or actually net income over here in 2025.
Cash flow was actually negative in '23, and is now sitting free cash flow, it's sitting at about $550 million in free cash flow, which is pretty good. Actually, it's probably closer to $597 million in free cash flow for the year, which is pretty dang good. And a lot of that free cash flow is going straight into Bitcoin.
You can actually see that right here, purchases of digital assets. So, in 2025, they bought an extra $500 million of digital assets. As of February 26th, they had about 4,710 Bitcoin. And we were doing a spreadsheet that was sort of just trying to calculate the losses that these companies were going to report because of their Bitcoin ownership.
The last time we updated this was on February 26th, and we were assuming if Bitcoin is worth $85,000, what kind of losses would these companies have to their net income? And back then, we were figuring Tesla was going to show like a $1.3 billion loss or sorry, about a $322 million loss. This is compared to their actual net income.
GameStop would show about a $131 million loss, which in fairness, they did. But, that's already reported. That's kind of behind us now, and Bitcoin's somewhat been recovering, still sitting lower than these numbers at 78k, but it's been recovering, right? That I think is a little bit more of that sideshow, possibly part Yolo to you know, "Hey, if Bitcoin goes to a million dollars, maybe I'll get my stock back faster, right?" But anyway, GameStop cash flow has been growing.
One of the reasons cash flow has been growing is not just because gross profit has been growing or that revenues have been growing because revenues really kind of flat. You're at about 7.4% growth here. You can actually see that, and that's on gross profit. You can actually see their top-line sales have been negative.
So, you've really been shrinking in sales. The company's top-line is shrinking, but their gross profit is going up. So, they're able to sell collectibles at higher margins. You know, maybe it's those Pokémon cards. We got to rip a Pokémon. We should rip a Pokémon card. We'll do that in a moment. Uh we'll we'll rip something.
Here, I got one. You know what? We'll rip What is this? I think this is a Fantasmal Flames. We'll rip If you If you stay till the end of the video, we'll not only get a shilling, but we'll rip this pack and pitch a coupon code to you over at meetkevin.com. I might even pour myself tea if you stay long enough.
But anyway, let's focus on the fundamentals. So, they got 7.4% growth here. They've slashed their SG&A. So, what they're doing is they're selling because their revenues are going down, but they're actually generating more gross profit, what they're really doing is they're cutting costs. So, they're going to be cutting their um uh product cost uh probably by selling more collectibles at higher margins.
You know, I know when I bring my kids to a GameStop, you know, they're paying a fortune for like stuffed animals or, you know, collectibles or whatever. And that's a higher margin product because you get more of an emotional buyer as opposed to somebody who's just buying off a logic. I mean, that's sort of the nature of Pokémon.
It's a little gambly anyway. But come on, we all do it. At least a little bit. Uh and so, you know, SG&A getting slashed, that's like the corporate side. It doesn't surprise me that Ryan Cohen's going in there going, "All right, we're firing half of y'all and we're just going to, you know, AI this up." Don't blame that at all.
I actually think it's smart. In fact, I think the biggest beneficiaries of artificial intelligence over this next decade are going to be people. As much as we like to use AI on on a regular basis to help us with whatever we're doing. I honestly think it's going to be corporations. They're going to make the dollahollas.
So anyway, it's not a surprise that costs are getting slashed here. Uh they're you you know, they're so How should I phrase this? Uh you know, they're obviously making money from interest on their cash. But look at this. Wow. I didn't know it was going to be this perfect. Holy smokes. Loss loss on digital assets 131.6 million.
Uh isn't that what we estimated in here? I estimated 131.8. Let's freaking go, bro. Oh, I deleted it. There we go. I swear I did not write that in there. If you go back through my old videos and look at the spreadsheet, it will still say 131.8 back then when we wrote it. Uh that's kind of cool. I actually I feel good about that.
But, I mean it's not that hard if you know how much Bitcoin they hold and at the end of the quarter you're like, all right, well, that's what the price was at the end of the quarter. It's just It still makes me feel kind of good. It's like, all right, we're on the right track here. So, anyway, because of the slashing, net income has actually been exploding.
So, he's been doing a really good job at uh getting EPS up despite the fact that share count is kind of exploding. Like, he came in and share count's up at like 550 mil divided by 394 on the diluted basis. Share count's up 39%. You know, some of this is going to be pricing in his stock options, obviously, but you know, share count's not shrinking.
It's going up over here. The balance sheet's okay. We've got roughly $9 billion. We do have long-term debt though of 4.2. So, everybody says they have $9 billion of cash, but you got to take off half a bill for short-term bills to pay. So, I've got 8.5. Then I've got 4.2 of long-term debt, which you don't necessarily have to pay off right now.
But, they really only have 4.3 of free and clear like equity, if you will. You know, their shareholders equity is listed because they're putting some other long-terms in here at 5.4. So, really somewhere between 4.3 and 5.4 billion dollars, that's all the equity they have. So, they're trying to like bat in a league that's 10 times their size by going for eBay.
Now, we've looked at the balance sheet for GameStop. We looked at the revenue. We looked at the cash flow for GameStop. Let's go look at eBay's. All right, so we'll keep this nice and simple for you. First thing we're going to do here is we're going to look at the cash flow statement. eBay actually generates cash flow.
In 3 months, they almost do a billion dollars of cash flow. It's about 900 million dollars of cash flow, and they are rebuying stock, like a good amount of stock. They are rebuying 486 million dollars of stock, and they're only issuing 156 of stock comp. They're rebuying three times as much stock as they're issuing to stock comp.
This is great. So, we should actually see the share count go down on this one, if I can find it here. Doesn't really matter so much. But, in addition to that, if we actually scroll up over here, yeah, there it is. See, share count's going down, 457 divided by 475. So, the buybacks are working, the share count's going down, they're issuing less stock.
Their cash flow is actually really good. Their revenues at eBay, I was actually impressed. Their revenues are up 19.4% year-over-year, and their gross profit is up 21.1%, which means their PP is shrinking, because they're making more money on smaller revenue growth. That's good. And their OPEX is down.
So, they're they're you know, we've got here, let me see here. Let me just double-check that. Hold on, 1676, 1277, 31%. Ah, let let me rephrase that. Their operating expenses, in fairness, are up a bit, but hold on, there was a reason for this. OPEX blurry, I should say, due to transaction losses. So, we do have this transaction losses section here that kind of blurs the OPEX a little bit.
Let's just call the OPEX more stable if we adjust for that, and just say they're getting some gross profit pricing power increase, and they make plenty of cash flow. So, they make good cash flow. Their EPS isn't growing that quickly, partly due to other income being smaller. The price to earnings growth ratio on this stock is only about a 1.9.
And their PE ratio on the stock is about 19.2. So, not bad. 19.2 PE ratio on a forward basis. Growth is about 10% per year going forward 4 years. About a 1.9 PEG. If I had to do a valuation on eBay today, I would say that it's probably worth $160. Maybe $162. That's roughly what a fair price right now is for eBay.
Look at this, by the way. This is the Qs. I had a price target in the course member live streams. We've had this price target for weeks now. We had a price target of $675 for the triple Qs. And look how many times we rejected it today. Fail breakout, fail breakout, fail breakout, fail breakout. But we got to 675.
And I'm so happy because, you know, this is what we've been forecasting for weeks now in the course member live stream. And you know, I know publicly a lot of people have been skeptical of the bullishness, but it's been paying off for course members, so I'm really happy. If you're not part of the courses yet, make sure to go to meetkevin.com.
I did say there would be a course pitch. That was it. Sorry. Let's go look at eBay. eBay in after hours is up about 13%. 162, call it, divided by 117 means we still have about 38% upside on eBay stock, even though it's already been moving up. Now, I actually don't think that eBay is necessarily the best purchase.
I'll explain. I do think what they're trying to pull off is brilliant, though, because they're pulling an Amazon strategy here. They're trying to do this online plus brick and mortar thing, which is like Amazon taking on Whole Foods as well as distribution locations. So, it's kind of smart. And I did write that, you know, once you take more than a 5% stake in the company, you have to file a form 13D with the SEC within 5 business days.
Uh and then after you get to a 10% threshold, you file uh within 10 calendar days. Anyway, the The is, if they've recently been doing big buying of eBay stock, GameStop, they'll probably have to disclose soon, and that's why they're strategically probably leaking this. Or Or, and this is jaded sinister Kevin, okay?
So, um you know, I'm I'm not trying to be a little fussy wussy here. You know, I'm not bearish on anything. I don't have shorts or positions in any of the stocks mentioned in this. No Etsy, eBay, GameStop. I just I just don't have positions, okay? So, I'm I I don't care. I don't have a horse in this race.
I like to be transparent about that. Sometimes people are like, "Oh, Kevin, are you short? Well, Kevin, why don't you show us your call options?" And I'm like, I I'm going to tell you uh if I got a position. I I personally don't want to ever be that kind of person that's like, "Oh, I'm going to make a video so I can pump my own stock or whatever." Because then I feel like yeah, you can make short-term money doing that, but you lose credibility long-term doing that.
And that's that's not playing the long game. I'm here I'm here for a long time. Um okay. I think the better strategy is actually Etsy stock. Now, I know that's crazy cuz you don't have that name recognition that you do with eBay. Like these Bionicles, one of the greatest gifts ever uh just because when I was a child, I I grew up with Bionicles, and uh I'm really sad they don't do them anymore.
They have like a version of them called Ninjago, but I think the Bionicles are the coolest thing that LEGO ever did. And I'm a big fan of building LEGOs. I'm building the Model T right now. Uh and uh and this is the green one, you know, bullish day, got to get the green Bionicle out. But anyway, um where was I going with that?
Uh oh, yeah, we got them on eBay, you know, so so and and I you know, I have a big childhood memory buying bobbleheads and stuff on eBay. But I don't actually think you need eBay to pay that premium. I think you can actually pay discount and get a different stock. You get Etsy. So, you can probably meme rally both GameStop so you can issue more shares and have more cash.
Take your profits on eBay. Now you have more cash at GameStop and profits from your eBay stock using this sort of leak of news. And then you turn around and go pay cash for Etsy. [snorts] 4D chess. Now, I don't know if they're going to do that, but the reason I think that is because eBay is a $46 billion market cap company.
Uh I think the better strat is this $6 billion market cap company called Etsy. Now, in fairness, uh Cohen has this $100 billion goal, and it's a lot easier to get to $100 billion if you take a $10 billion company, combine it with a $46 billion company, now you have a $56 billion company. You're more than halfway there, right?
Ebay or GameStop buying Etsy gives you like an $18 billion company. You need to do a 5x, right? So, you got a lot of work to do. But, I actually think Etsy is a cheaper deal. It gives you that online marketplace footprint and in-store collectible selling facility. I think this is the 4D chess move cuz it's also cheaper.
Now, what's interesting about Etsy is that in October, we analyzed Etsy with course members, and I actually called it a strong buy and said it had a bullish next 12 months. Since that call, the stock is up 20%. Now, Etsy is still in the toilet as a stock compared to COVID days. But, that's okay because it's kind of like bottom feeding.
You know, we were doing the analysis at like $50 on the stock, 48 to 50 bucks. It's trading for like $63 now. So, you're still up like over 20% since we did that analysis in early October in the course member live stream and called it a strong buy, and we're bullish the next 12 months. The These are just the like I don't own Etsy.
I told you that. But, somebody asked me to analyze it in the course member live stream, and I did for them. And And that was the analysis I came away with. Now, I'll give you a current analysis on this, and you could have that sort of analysis, too, if you join over at mekevin.com. Remember, you could use that coupon code Uh what is the current code?
Oh, yeah, that's right. J is holding it up. Goodbye Powell is the current code over at mekevin.com. J, of course, named after Jerome Powell. Same initials, JP. Now, if you go over here, you can see that a gross profit at Etsy is only up about 2.5%. So, we're not really growing much at the company, and that's why the company's kind of cheap right now.
Gross profit's up about 2 and 1/2%. Revenues are up about 3.1%. Not the strongest PE. Their operating expenses tanked because they didn't take an uh uh you know, um asset impairment charge this year, but otherwise, their marketing's relatively stable. G&A has been cut a little bit. And if you look at this company, they produce money.
$70 million net. I've got I do have a share count that's going up, so a little less ideal. I've got $79 billion of cash flow. Nowhere near the $900 million of uh eBay. eBay's doing like 11 to 12 times as much cash flow. But, they are also buying back about three times as much as their stock comp. They've got a decent balance sheet.
I've got just enough cash to offset their short-term debt, and then a little about 2 and 1/2 billion dollars of long-term debt. So, not great, but it is trading for a uh 0.83 PEG, which is insane because it means the upside at Etsy's actually quite high. Uh Etsy could probably trade, if I do a price target on Etsy, uh we currently sit at a PE ratio of 11.5.
And if I multiply that by their growth rate of 13.78 per year for the next 4 years, you could uh let me see if that's right. That seems too high. 426? That seems too high. But, 0.83 the PEG ratio is just so low right now. Hold on a sec. 2.69 / 0.83 is 3.2 times No, that's not right. I I I did something wrong.
Let's call it around a $200 price target on this. Anyway, obviously I'm screwing something up on my math as I'm doing this on the fly. 13 times growth Oh, I think I know what I did. Times 5.48 EPS. And uh then we have times 2.69 Ah, there we go. Okay, yeah, 202. $202 price target. So, this could reasonably go up 3x.
Whereas eBay has a reasonable upside of 38%. Now, eBay could go up more because as we know, stocks go up because of momentum. And a lot of people have, you know, big peepee for Ryan Cohen, you know, whatever, the meme lord, I don't know, whatever people want to call him. But, um you know, I I'm going to give you some bottom lines here.
I think GameStop is in a great position to make some deals. I don't think they have enough equity to really take a controlling position of eBay. They could take an influencing position and like partner with eBay, but I don't think they have the equity to pull off like some kind of crazy leveraged buyout.
I do think that would be best case scenario for Ryan stock.com, but I think they're going to realize that's not going to work. And I wouldn't be surprised if they just ring the bell on their cash from their eBay stock gains, turn around and then just buy out something like Etsy. Could be wrong, but this is just my rapid reaction to the news.
And if you like this sort of rapid reaction to the news, a little bit of Lego, a little bit of weirdness, and short shorts, and tea, and Mario, then you came to the right place. Make sure to subscribe to the channel. Now, let's see if we're legit, and let's rip one. I you know, it's it's Collectibles are somewhat like gambling, but the kids love it.
The problem is with the kids, I'll tell you. One of the If you have two boys and they're doing Pokémon, the worst thing that happens is one of them gets a hit and then the other one doesn't. And so we've had this struggle because we will like reward one of them um Whimsicott, that's actually kind of a cool um promo card.
Uh you know, one of them will like both of them will behave well or whatever or they'll do something good and then they'll get rewarded with like a Pokémon pack. But then the problem is one of them will get a hit and then the other one doesn't get a hit. And then the one that doesn't get a hit is like bitter and pissy and then they end up getting a time out and then they're fussy and you know, and then they feel like they got punished be just cuz they they missed on their gamble, you know, they went on red and they should have gone on black.
Always go on black. Love black. Um fire? Oh. Damn, I totally screwed up. Um I was supposed to, I guess on Fantasmal Flames only move one card. I think I moved two, which means that's probably the end. What did I do wrong? I totally screwed this up. I did not get a hit. I was supposed to pull the energy card.
Uh oh, I think Fantasmal is actually four. One of them is It was uh it was psychic energy. I don't know. I need to talk to the kids. Uh obviously, I'm not legit at re-opening at opening packs here. But you're supposed to make it so that your hit is the last card, not the first one. Ooh, pile up. I have um people I have the um I have a rare version of this, which is kind of cool, somewhere on my desk.
But anyway, um we didn't get anything. We didn't get anything at all. Um but um that's uh that's the nature of it. Oh, well. I still love you. We got our shilling and uh we'll see you in the next one. Better luck on the next pa.
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