Background: GameStop is the US gaming retailer best known for selling second-hand video games. The company operates around 1,600 stores and also owns EB Games in Australia. GameStop became the face of the 2021 meme-stock frenzy, when retail investors from Reddit sent its share price soaring from around $5 to more than $500 in just weeks.

What happened: Now, GameStop is aiming much bigger. GameStop's CEO has launched an unsolicited $55.5 billion USD bid to acquire eBay, which is a 20% premium on its pre-bid price. When asked how the company would fund the deal, GameStop's CEO suggested it could simply issue more shares.

What else: After this news, GameStop's shares actually fell 10%, while eBay shares rose 5%. It's another reminder that when a company is fuelled by meme-stock momentum, even the boldest ideas can start to feel possible.

What's the key learning?

💡The stock market is supposed to price companies rationally, but every now and then... it doesn't. And smart…or very optimistic… CEOs can use that to their advantage.

💡Meme-stock surges can give companies real financial firepower. GameStop used its inflated share price during the 2021 frenzy to issue stock and raise billions in real cash. The result? A struggling retailer ended up sitting on $9 billion USD in cash.

💡But even with all of that cash, they still can't afford eBay. GameStop still falls well short of funding a $55.5 billion eBay takeover - especially once its own shares started falling. So it's back to the drawing board for GameStop's CEO.