GameStop has asked shareholders to approve increasing its authorized Class A common shares from roughly 1 billion to 2.5 billion. The move is explicitly tied to the company's ongoing pursuit of eBay.
As of May 2, GameStop had approximately 448.65 million shares outstanding, leaving significant room under the current authorization. However, the company says it needs more capacity for what it has planned next.
The proxy filing directly references strategic transactions, naming eBay as an example. GameStop has accumulated a 6.55% stake in eBay as of May 20, following a rejected takeover bid.
CEO Ryan Cohen's performance-based stock option award requires GameStop to sustain a $20 billion market capitalization alongside specific EBITDA targets. This structure ensures management benefits only if the stock price reflects the value of strategic bets.
Increasing authorized shares does not immediately dilute existing shareholders; no new shares are issued until the board decides. If approved, GameStop could issue up to roughly 2 billion additional shares without another shareholder vote.
The gap between current shares outstanding and the proposed authorization is substantial, potentially allowing a stock-based bid for eBay. Existing GME holders would see their ownership percentage shrink significantly if such a deal proceeds.