GameStop (GME 1.11%) is playing to win. After four fiscal years of declining revenue growth, the video game retailer knows it needs to start thinking outside the small box if it wants to thrive, or even survive.
CEO Ryan Cohen announced on CNBC in late January that GameStop was working on a major acquisition of a larger consumer company. He said it would be transformational for not just his own company, but also for capital markets in general.
Armed with more than $9 billion in cash at the end of January, investors began plotting the potential purchase. Despite also packing more than $4 billion in long-term debt, GameStop would still be able to buy a larger company through additional leverage or by including more stock than cash in a potential deal.
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Continue?
Expectations of a narrative-altering adding were high heading into GameStop's fiscal fourth-quarter report two weeks ago. It would be the perfect time to spill the beans on this deal that had been in the works for months, but GameStop didn't address Cohen's earlier comments. There was no earnings call for analysts to dig deeper into the CEO's January hype.
Sometimes, transformational deals transform into something else, but a possible pairing isn't out of the question until Cohen says so. GameStop needs a reset, and I've seen a lot of wishful thinking and outrageous forecasts for the widely followed video game stock. Let's close with three potential publicly traded companies that I think could be doable with GameStop in its current state. They all seem unlikely, but they still bear watching.
NYSE: GME
Key Data Points
Best Buy (BBY 0.47%): With an enterprise value of $15.7 billion, Best Buy is certainly larger than GameStop. It's also been consistently profitable over the years. GameStop, on the other hand, posted three years of small profits after years of losses. It also posted an operating profit in fiscal 2025 after six years of deficits. But the only reason those operating losses turned into positive net income in the last two red-inked years was the interest income it generated from its substantial cash. That safety net will probably be gone in a deal.
Best Buy would still be a good catch. Unlike the video game industry, which shifted to digital distribution -- a knockout blow for GameStop's business -- folks still need physical appliances, smartphones, and electronics.
Sirius XM (SIRI 1.68%): Satellite radio is on a slow fadeout, but the last three years of top-line declines have been modest compared with GameStop's slide. Sirius XM is also highly profitable, consistently generating more than $1 billion in free cash flow annually. One thing holding Sirius XM back is its appeal to younger listeners. GameStop, with its meme stock fervor, could make the premium radio platform cool again. Its enterprise value is $17.9 billion, but think about what GameStop could do with the free cash flow to fund digital or crypto initiatives.
eBay (EBAY +3.79%): This is the one that makes the most sense, as I'm not sure that Best Buy or Sirius XM would result in a favorable jump for GameStop stock. The online marketplace operator is a shell of what it used to be. It has unloaded many of its non-core businesses. However, unlike any other company here, including GameStop, revenue has increased in each of the last three years. The $46.4 billion enterprise value will make this deal difficult to wrap up for many reasons, but it's a scalable business that can get going with the right meme stock nudge.
