Summary

Cohen’s eBay thesis is to create immediate earnings through a $2 billion cost reduction, then use live commerce and in-game-item trading to restart growth. He points to nearly $5.5 billion of expenses and $2.4 billion of sales and marketing with essentially no user growth; eBay Live addresses a roughly $400 billion market yet draws at most a few hundred viewers. Digital skins and weapons, he argues, have “real utility” and could become larger than eBay’s physical marketplace.
GameStop and eBay fit because they overlap in secondhand collectibles and refurbished tech, authentication and liquidity, while eBay supplies global scale and GameStop supplies 1,600 physical nodes. Stores could become creator studios, authentication points and logistics sites. “What we’re doing in stores, eBay is doing online,” says Cohen, who puts the deal inside his e-commerce “circle of competence.”
The core eBay problem, in Cohen’s telling, is not a vanished moat but ownerless execution that has alienated the marketplace’s real customers: sellers. Since COVID, he says GMV, operating earnings and active users—the latter by 30 million—are down, while operating expenses exceed half of revenue. Sellers need third-party tools because eBay lacks an Amazon Seller Central-like “soup to nuts” system; his fix starts with engineers directly resolving seller pain.
GameStop’s turnaround is also Cohen’s admission that copying Chewy into a superficially similar retailer was “really, really stupid.” After e-commerce hires and an unsuitable strategy led to inventory such as TVs getting stuck in stores, he shifted to “maniacal cost-cutting,” pre-owned retail and collectibles, including cash-on-the-spot trade-ins for PSA-graded cards rated 8 or above. Friedberg cited collectibles at 42% of revenue, $9.7 billion in cash and $333 million in free cash flow.
Chewy taught Cohen that low-margin retail is won through pennies, recurring demand and obsessive service. He scaled purchasing from pallets to truckloads, treated supplier gifts as evidence of overpayment, paired Amazon-grade logistics with handwritten cards and pet portraits, and hired for “will over skill.” Negative working capital let the company reach billions in revenue without consuming much capital.
The bid deliberately gives eBay holders 50% cash and 50% combined-company stock, making the vote a judgment on who should run and maximize shareholder value from the asset. Cohen says near- to medium-term earnings would still come from eBay, and an anticipated filing would show him putting $500 million of his own money into the transaction. Friedberg’s all-cash challenge invoked $56 billion; Cohen replied that “$60 billion of cash” was not lying around.
With eBay’s board refusing substantive engagement, Cohen says he has escalation paths and, “I’m not going to stop. I’m not going to go away.” A close vote failed to lower the special-meeting threshold from 20% to 10%, and he would not detail shareholder talks beyond saying the consensus was generally aligned. His grievance is incentive asymmetry: he risks capital while directors do not buy shares with their own money and the CEO could receive a parachute above $100 million.

Deep dive

1. Chewy began with recurrence, not pet-sector romanticism

Cohen was preparing to launch an online jewelry site and had already bought hundreds of thousands of dollars of inventory despite knowing nothing about jewelry. Shopping for his poodle exposed a better category: recurring purchases, a fragmented market still populated by neighborhood stores, and Amazon’s failure to reach real pet scale.
The Chewy proposition fused Amazon’s supply-chain basics—fast shipping, broad selection and competitive pricing—with neighborhood-store product knowledge. Selling 30-pound pet-food bags against Amazon was, in hindsight, “not necessarily the best idea,” but Cohen aimed for market leadership rather than a comfortable niche. Pets.com and the crowded competitive backdrop made capital difficult to raise; he says the market underestimated Chewy’s execution rather than the addressable market.
Food, treats and litter came first because they were recurring purchases and the customer cohorts proved sticky. Handwritten holiday cards, pet portraits and 24/7 service made customers continue shopping and generated word-of-mouth referrals: “If we treat our customers well, they’re going to continue shopping with us.”

2. Retail success was a pennies game run by obsessives

With Amazon as the real competitor, Chewy moved from pallets to truckloads, distributors to direct purchasing, and relentlessly optimized warehouse labor and carrier rates. Cohen’s arithmetic was unforgiving: “Pennies in the red is failure, and pennies in the black is success.”
Supplier relationships were largely transactional in his framework. Gifts meant Chewy was probably overpaying; a supplier saying he never wanted to negotiate with Cohen again was “a compliment.” Cohen personally managed Google AdWords until 4:00 or 5:00 a.m. and negotiated with major vendors.
His hiring rule was “will over skill.” A persistent applicant from an elderly-care home lacked the expected customer-service résumé but kept applying and ultimately became exceptional; Cohen wanted “diehards” willing to go all in—a team he jokingly called “a bunch of fellow psychopaths.”
Chewy’s negative working capital supported billions in revenue without heavy capital consumption, culminating in a $3.35 billion sale in 2017. Friedberg noted that its IPO about two years later valued it at roughly $20 billion; Cohen conceded, “Nobody has a crystal ball.” His subsequent investment filter favored established, historically profitable companies that had fallen out of favor.

3. GameStop began as a console-cycle bet, then became activism

GameStop was initially a passive position below 5%. Management, then fighting another activist, offered Cohen one board seat because it expected a friendly ally; after reviewing the large board, Cohen found a single seat unattractive rather than accepting it on those terms.
COVID intensified the setup: GameStop was deemed non-essential, appeared near bankruptcy and traded sharply lower. Cohen accumulated above 5%, then chose between a passive 13G and an engagement-oriented 13D. When the CEO asked which he had filed, Cohen answered: “A D.”
The original thesis was narrower than the eventual turnaround. Cohen expected GameStop to survive until the next PlayStation and Xbox cycle, when tight supply and the start of the cycle historically drove consumers into its stores. He was attracted to the extreme pessimism: investing felt like “running into a burning house.”
In early 2021, Cohen joined the board with two former Chewy colleagues. Friedberg said the stock then took off as short funds covered, which Cohen confirmed. Friedberg also recounted that GameStop raised $1.7 billion and wiped out its debt. Cohen says becoming deeply involved and ultimately CEO was not the original plan; he stepped in because someone needed to do the job.

4. GameStop’s first strategy failed before a narrower model worked

Cohen initially assumed Chewy’s lessons would transfer directly to another retailer, hired e-commerce talent from Chewy and Amazon, and hired a CEO while lacking daily visibility. It took just over a year to recognize that making GameStop resemble Chewy was “really, really stupid.”
The inventory models were fundamentally different. Chewy’s recurring demand and rapid growth meant it could ultimately sell inventory it bought; GameStop accumulated products such as TVs that became trapped in stores and required loss-making markdowns. Cohen entered the CEO role with “zero physical retail experience.”
Once in charge, he saw that the financials did not work and entered “maniacal cost-cutting mode,” concentrating on pre-owned products and disciplined store operations. He leaned heavily on longtime employees because “the people who know GameStop the best” were already inside the company.
Collectibles emerged from categories GameStop already carried, particularly trading cards and increasingly sports. Customers can bring in PSA-graded cards rated 8 or above for immediate cash; GameStop then resells them in-store or online. Friedberg’s scoreboard included collectibles at 42% of revenue, or $350 million in Q1, $835 million of total revenue, 14% year-over-year growth, SG&A falling from $228 million to $202 million, $9.7 billion in cash, $333 million in free cash flow and a newly authorized share repurchase.

5. eBay retained its marketplace moat but squandered e-commerce growth

Cohen sees unusually direct overlap: collectibles, refurbished technology, authentication, trade-ins and liquidity for secondhand goods. eBay adds global scale and an operating model he understands better than physical retail. Unlike Chewy or GameStop, he calls this “actually a really good idea,” whether or not the takeover succeeds.
eBay’s first-mover marketplace created staying power, but Cohen argues its post-founder execution failed to follow e-commerce growth. “eBay could have been Amazon”; instead, Amazon, Shopify, social commerce and live-shopping competitors took share while eBay defaulted into niches such as rare cards, pens and used auto parts.
Friedberg pressed whether Amazon’s high seller charges leave an opening. Cohen agreed sellers dislike the margins but value the volume; he nevertheless rejected owning first-party inventory or competing with Amazon head-on. His preferred eBay remains a focused marketplace, expanded organically rather than through loosely connected acquisitions.
Since COVID, Cohen says eBay’s GMV, operating earnings and active-user count are down, with 30 million fewer active users; revenue is roughly flat while operating expenses have risen significantly and exceed half of revenue. His sharper indictment: “The sellers are the customer,” yet sellers need outside tools and no longer feel eBay wants them to succeed.
Friedberg raised eBay’s purchases and subsequent divestitures of PayPal, Skype and StubHub. Cohen emphasized focus on the core eBay brand and organic expansion, adding that some recent acquisitions did not make sense.

6. The operating plan cuts $2 billion and opens two liquidity markets

The first lever is immediate: remove $2 billion from an expense base near $5.5 billion. Cohen singled out $2.4 billion of sales and marketing that produced “essentially no user growth,” arguing the stagnant, inventory-free marketplace should not require its current operating burden.
Live commerce is the first growth vector. Cohen estimated a $400 billion addressable market, already popular in Asia and expanding rapidly in the United States, yet eBay Live attracts at most a few hundred viewers. Seller approval queues, weak creator participation and a front and back end that “sucks” are self-imposed constraints.
GameStop’s 1,600 stores could become studios and fulfillment or logistics nodes for eBay creators, while also supporting authentication. Cohen’s division of labor would let creators focus on content while the combined company handles photography, fulfillment, logistics and product verification—turning the physical footprint into marketplace infrastructure.
The second vector is a marketplace for in-game digital items: skins, weapons and other assets accumulated in AAA titles. Cohen contrasted their “real utility” with NFTs, which ultimately had no real utility; he characterized art and physical trading cards as “ego plays.” Because no marketplace currently provides comparable liquidity, he believes this market “could be much larger” than eBay’s physical-goods marketplace.

7. The takeover fight is now about financing, incentives and control

eBay’s rejection cited uncertainty, including financing. Cohen’s rebuttal is that financing would be raised against eBay’s own balance sheet, so inability to finance the bid would imply eBay could not finance itself. He says management and directors have offered virtually no engagement, instead pointing to advisers who will not schedule meetings.
The proposed consideration is 50% cash and 50% stock at a premium to Cohen’s purchase price. Because eBay would supply most near- to medium-term earnings, existing holders would still effectively own the asset under new stewardship. Friedberg challenged him to make an all-cash offer, referring to $56 billion; Cohen answered that they did not have $60 billion of cash lying around.
Cohen said a forthcoming filing would show $500 million of his own money entering the deal. He contrasted that exposure with an incumbent CEO who, he says, has sold tens of millions of dollars in stock without buying shares in the open market, plus a change-of-control parachute worth more than $100 million.
The special-meeting threshold remains 20% after a close vote failed to reduce it to 10%, but Cohen said shareholder sentiment was generally aligned. He allowed that shareholders who love the business might prefer to remain invested rather than take 50% cash, potentially changing the shareholder composition.
Cohen repeatedly asked why the media seem to want GameStop to fail while favoring an entrenched board and management. Friedberg offered a separate theory: acknowledging Cohen’s competence would require commentators to admit they were wrong to dismiss GameStop as merely a meme stock. Cohen agreed.
Asked whether he would go hostile or launch a tender, Cohen stayed non-specific: “Whatever we need to do in order to succeed.”

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