Ryan Cohen’s Mysterious Bank Letter Backing GameStop’s eBay Bid Has a Self-Destruct Button
Imagine this: You walk into a bank and ask for a massive loan to buy a house. The bank says, “Sure, on one condition. The house must remain in perfect condition.” Then you tell them you plan to finance the purchase by taking out a second mortgage on the same house, loading it with so much debt it would immediately fall into disrepair. The bank smiles and hands you a letter saying they’re “highly confident” they can lend you the money, as long as the house stays pristine.
That’s essentially what just happened with GameStop, Ryan Cohen, and a mysterious bank letter from TD Securities.
Earlier this week, GameStop made an audacious, unsolicited $56 billion bid to buy eBay, a company roughly four times its size. To back this up, Cohen waved a “highly confident letter” from TD Bank promising $20 billion in debt financing. It sounded impressive. It made headlines. But buried inside that letter, according to people who’ve actually seen it, is a condition so contradictory it might render the entire deal unfinanceable.
Let’s unpack what’s really going on. Because this isn’t just a story about one bizarre acquisition attempt. It’s a masterclass in how financing really works, and how a single clause can blow up a $56 billion dream.
What’s Actually in This Mysterious Bank Letter?
The letter in question comes from TD Securities, the investment-banking arm of Canada’s TD Bank. GameStop disclosed it as part of its pitch to eBay shareholders, proof, supposedly, that the money is there.
But here’s what most headlines didn’t tell you.
The $20 Billion “Highly Confident Letter” from TD Securities
A “highly confident letter” is Wall Street speak for: “We think we can probably raise this money, but we’re not legally on the hook yet.” It’s a step above a handshake and several steps below a binding commitment. In M&A circles, it’s table stakes, the kind of thing you need just to get a seat at the negotiating table. But it’s not a guarantee.
GameStop touted this $20 billion commitment as evidence that the numbers work. The video game retailer, which has a market capitalization of roughly $11 billion, would combine its own $9.4 billion in cash with TD’s debt financing and a massive stock issuance to reach the $56 billion total.
So far, so ambitious. But the devil, as always, was in the fine print.
The Investment-Grade Condition, The Catch Nobody Saw Coming
CNBC’s David Faber dropped the bombshell: the TD Bank letter contains a key condition. The combined GameStop-eBay entity must maintain an investment-grade credit profile.
In plain English: after all the borrowing, the new company has to look financially healthy enough that credit-rating agencies would stamp it “safe to lend to.”
That sounds reasonable on its face. Banks want to lend to solid borrowers. But here’s where it gets surreal, because the very act of doing this deal would almost certainly destroy any chance of hitting that threshold.
The Circular Paradox: Why the Condition Destroys Itself
This is the part that should make any finance nerd’s jaw drop.
Moody’s Drops the Hammer, 9x Leverage Is Not Investment-Grade
Moody’s Ratings didn’t wait long to weigh in. On Wednesday, the credit-rating agency labeled the proposed acquisition “credit negative” for eBay, warning that the deal would balloon eBay’s debt from about $7 billion to roughly $31 billion.
Even accounting for the $2 billion in annual cost cuts Cohen promises, Moody’s estimated the combined company’s leverage ratio, debt relative to earnings, would approach nine times EBITDA.
For context: investment-grade companies typically operate at 3 to 4 times leverage. Nine times is deep into junk-bond territory, the kind of leverage that screams “distressed,” not “safe to lend to”.
So let’s connect the dots:
- TD Bank says: “We’ll lend you $20 billion, if you stay investment-grade.”
- Moody’s says: “If you take that $20 billion, your leverage goes to 9x, which is absolutely not investment-grade.”
- Which means: the financing is contingent on a condition that taking the financing makes impossible to meet.
It’s like a lock that requires a key that’s locked inside the box. The letter isn’t just weak; it’s self-defeating.
The Self-Defeating Math
The AInvest team called it a “credit trap” — and that label fits perfectly. “The financing is not a guarantee but a ‘highly confident letter’ with a key condition: the combined entity must maintain an investment-grade credit profile. This is the deal’s linchpin,” their analysis noted. “The primary risk is the non-binding nature of the TD Bank letter, which is contingent on maintaining an investment-grade credit profile, a condition the deal itself jeopardizes”.
This is the core narrative that most coverage missed. It’s not just that the deal is underfunded, it’s that the funding mechanism contains a logical contradiction. The TD letter isn’t a bridge to the deal; it’s a tripwire.
The $16 Billion Elephant in the Room
Even if we set aside the credit-rating paradox for a moment, there’s a simpler problem. The math doesn’t add up.
Cash, Stock, and the Gap Ryan Cohen Won’t Explain
Here’s the rough math everyone keeps circling back to:
- GameStop’s market cap: ~$11 billion (as of early May 2026)
- eBay’s market cap: ~$46 billion
- Deal valuation: $55.5–$56 billion, or $125/share, a ~20% premium
- GameStop cash on hand: ~$9.4 billion
- TD Bank letter: $20 billion (non-binding, conditional)
- Remaining gap: $15–$16 billion — unaccounted for
Ryan Cohen says the deal is “half cash, half stock.” But when CNBC’s Andrew Ross Sorkin walked him through the numbers, point by point, Cohen’s response was essentially: “We’ll see what happens” and “The details are on our website”.
Becky Quick, clearly frustrated, said: “Ryan, that’s a pretty straightforward question. I don’t get it. Where’s the rest of the money come from?”. Cohen redirected her to the press release.
When the CEO of a company proposing the largest leveraged buyout in history can’t (or won’t) explain where nearly $16 billion comes from, investors notice.
To cover the stock portion alone, GameStop would need to issue roughly $28 billion in new shares, more than twice its current market cap. That level of dilution would decimate existing shareholders.
Michael Burry Takes His Ball and Goes Home
If you need a character witness for why this deal makes people nervous, look no further than Michael Burry, the investor made famous by The Big Short for predicting the 2008 financial crisis.
Burry sold his entire position in GameStop after the eBay bid was announced. His comment? “Never confuse debt for creativity.”
He didn’t stop there. Burry laid out a detailed analysis showing the proposed deal would push leverage to approximately 7.7 times EBITDA, with interest coverage ratios of just 1.2 to 1.5 times, levels he described as “bordering on distressed”.
When the guy who saw the subprime mortgage collapse coming looks at your financing structure and runs for the exit, it’s worth paying attention.
The CNBC Interview That Made Everything Worse
If you haven’t watched it, it’s painful. Cohen appeared on CNBC’s Squawk Box on Monday, May 4, 2026, and proceeded to give what multiple outlets described as a “bizarre,” “evasive,” and “defensive” interview.
“Half Cash, Half Stock, The Details Are on Our Website”
The exchange went something like this:
Sorkin: “Where’s the rest of the money coming from?”\ Cohen: “Half cash, half stock. The details are on our website.”\ Sorkin: “I’m just trying to understand the math, there’s a gap.”\ Cohen: “Yeah, well, we’ll see what happens.” [awkward laugh from Sorkin]
When pressed on why he hadn’t approached eBay’s management before going public, Cohen grew defensive: “Didn’t you guys call for GameStop’s demise multiple times? … Look at our financial performance. Is it better than you guys anticipated? Because you guys said it was going to be doing really, really poorly, and it’s actually doing OK”.
The New York Times described the interview as “dizzying,” noting Cohen “appeared flummoxed by fundamental questions” and “featured several awkward periods of silence”.
What the Market Thinks
The market’s verdict was swift. GameStop shares fell over 10% on Monday following the interview. Meanwhile, eBay shares rose only about 6% to around $110, well below the $125 offer price, signaling deep skepticism that any deal will actually close.
In M&A, the gap between the offer price and where the target stock trades is called the “spread.” A wide spread means the market thinks the deal is unlikely. This spread is a canyon.
Is This All Just a Stunt? The Counter-Narrative
Okay, let’s be fair. Not everyone thinks this is a genuine acquisition attempt. There’s a plausible theory that this is a publicity play designed to boost GameStop’s stock and give Cohen leverage.
Publicity, Stock Price, and the Meme-Stock Playbook
Cohen knows his audience. He’s a hero to the meme-stock community, the retail investors who turned GameStop into a cultural phenomenon in 2021. When he announced the eBay bid, retail investors flooded back in. Vanda Research reported that meme-stock buyers made their fifth-largest single-day purchase of GameStop in the past 12 months following the announcement.
Some analysts have suggested Cohen may be attempting to leverage GameStop’s meme-stock status. If the publicity around the deal can boost GameStop’s stock, the deal becomes more realistic, because less cash would be required for the stock portion of the offer.
It’s a self-fulfilling prophecy: make a splash, pump the stock, and then point to the higher stock price as proof the deal works.
The 5% Stake: Heads I Win, Tails You Lose?
GameStop has already built a 5% stake in eBay through derivatives and common stock. Even if the deal fails, GameStop profits from any upward movement in eBay’s share price, which tends to happen when a company is “in play.”
TheStreet put it bluntly: “GameStop says it wants eBay; it probably can’t afford it. They might still win something anyways. … They’re up over $1 billion on their 5% stake”.
It’s a classic corporate-raider move, a tactic from the 1980s playbook that’s seen a resurgence in this era of easy money and viral finance. Finimize called it exactly that: “That ‘highly confident letter’ thing is a 1980s corporate raider move, its comeback says that loose money is looking for risky deals to fund”.
What Happens Next, And What Investors Should Watch
eBay’s board is scheduled to review the unsolicited bid this week. The company confirmed receipt of the offer on Monday but has made no commitments.
Cohen has already signaled he’s willing to escalate. If eBay’s board rejects the offer, which seems likely, he has threatened to pursue a proxy fight, taking his case directly to eBay shareholders.
“eBay is not happy with me,” Cohen acknowledged on the TBPN podcast. He noted the board “didn’t like” his critiques of director fees and extravagant spending.
And then there’s the stunt that’s almost too strange to believe: Cohen took to eBay itself and listed roughly 25 personal items, GameStop store signs, a used carpet square, even a pair of worn Adidas crew socks that attracted bids over $14,000, declaring “I’m selling stuff on eBay to pay for eBay”. eBay promptly permanently suspended his account for “activity that we believe was putting the eBay community at risk”.
If nothing else, the man knows how to create a spectacle.
Key Signals to Watch
- eBay’s formal board response — a flat rejection or a request for more detail will tell you everything
- TD Bank’s public posture — will they clarify the investment-grade condition?
- GameStop’s stock price — can it hold above $25?
- Any follow-up from Cohen with actual numbers rather than deflections
- Regulatory scrutiny — a deal this size would almost certainly draw antitrust review
A Deal That Eats Itself
Here’s the bottom line: Ryan Cohen’s bid to buy eBay is either the boldest corporate move of the decade or an elaborate publicity stunt dressed in a tailored suit. The bank letter from TD Securities, meant to be the deal’s backbone, is actually the clearest evidence that the numbers don’t work.
When your financing package contains a condition that the act of financing makes impossible to satisfy, you don’t have a deal. You have a paradox. And you can’t build a $56 billion acquisition on a paradox.
The market knows it. Moody’s knows it. Michael Burry knows it. The question isn’t whether this deal closes, it’s what Ryan Cohen’s real endgame actually is.
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