On May 3, GameStop (NYSE: GME) attempted to make history by issuing an unsolicited acquisition offer worth to the beleaguered online marketplace eBay (NASDAQ: EBAY) worth a total of roughly $55.5 billion.
Despite drawing numerous headlines, serious questions can be raised regarding the credibility of the purchase. GameStop is not only proposing to pay a premium of $125 per share – at the latest close, EBAY was trading at $104.07, and in Monday’s pre-market, it is at $115.05 – but is also a substantially smaller company.
Indeed, at the end of the most recent regular session, the video game retailer had a valuation of $11.89 billion, while eBay’s market capitalization stood at $46.20 billion.
Still, given CEO Ryan Cohen’s success in turning GameStop profitable and pulling it back from the brink, and his stated vision of turning eBay into a company comparable to Amazon (NASDAQ: AMZN), Finbold decided to consult ChatGPT’s advanced artificial intelligence (AI) on where GME stock might trade should the merger be accepted.
ChatGPT reveals its core assumptions for the GameStop-eBay merger
OpenAI’s flagship platform started its analysis by noting the asymmetry between the companies and concluding that there would likely be a ‘post-deal re-rating of the combined entity’: a conclusion consistent with GameStop’s explanation that the purchase would be executed using cash and equities.
Under the circumstances, ChatGPT estimated that, following the merger and the related dilution, there would be between 700 and 780 million GME shares and that the base valuation for the combined entity would amount to roughly $48 billion – a simple sum of the latest recorded market capitalization.
Then, the AI explained that it assumed that investors would account for the inherent risks and expenditures, limiting the actual valuation of the post-acquisition GameStop to a ‘base case’ of between $35 and $40 billion. Interestingly, a mere handful of lines later, ChatGPT restated what it considers the most likely ‘base case’ as a slightly higher range from $40 billion to $45 billion.
ChatGPT sets the price target for GME stock after eBay acquisition
Thus, the AI concluded that, with eBay under its belt, GME stock might find itself trading at approximately $57 per share once the merger has been completed, and presumably, once Ryan Cohen was proven correct, he could cut some $2 billion in costs within the first year.
Notably, if ChatGPT’s assumptions are correct and eBay’s board accepts the $55.5 billion offer, GME stock will rally 137% from its 2026 baseline of near $24 to a new baseline of $57.
Lastly, the AI did not reflect on GameStop’s claim that it had secured up to $20 billion from TD Bank in debt financing, though it can be inferred that its more optimistic scenario of a $60 billion post-merger market capitalization and roughly $85 share price would account for the fact.
Featured image via Shutterstock
