A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true.
A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?
I imagine the vast majority of us do not have a problem understanding smaller companies can buy larger ones. Most of us are just incredulous that anyone is taking GameStop, especially Cohen, seriously.
Why wouldn't they? Before he showed up, Gamestop had years of negative earnings per share. They haven't had a negative EPS quarter in almost 2 years, now. That seems like a serious turnaround.
You’re omitting the fact that they’ve had declining revenue YoY 4 years now, with no sign this won’t be year 5. Their liquidity is primarily the result of leveraged debt and sold off shares. They have had to seriously downsize, including shuttering tons of brick and mortars.
You’re picking one single metric that’s not even consistent for 2 years to assess the health of the company. It feels rather cherry-picked. The whole story is very rough for them right now, they’re in trouble.
Seasonally-adjusted EPS has been a consistent stair-step up for 2 years. Declining revenue does not matter; they're squeezing more profit out of the revenue that's left than they were out of the gobs of revenue they had before. That's just what a good business does.
>You’re picking one single metric
It's THE metric. And you are, too (a single metric, but not THE metric).
>The whole story is very rough for them right now, they’re in trouble.
Trumpian logic and speech pattern. Which speaks to its lack of veracity.
When the revenue goes to zero, how much of that pie will be profit? The industry they're in is dying quite quickly, and there are no other revenue centers. The high margin business they had was reselling physical game media.
This is the same story as other dead physical media, CD's, DVDs, etc. It's going to continue to decline, and GME has no pipeline of future revenue. They continue to close stores and shrink.
Also, “revenue isn’t important” (sic) is a wild statement to me and indicative of the state of US businesses these days. The stock is the product, that is it, and a shocking number of people have no issue with that while also saying the US needs to bring back manufacturing and build things again.
If investor (and now government with AI projects) money is being funneled into businesses that are ultimately just about their stocks and not producing anything, what will be the result of all that investment? What are we not investing in as a result?
>Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?
A quick review of the comments here would have demonstrated that it is.
Is there anywhere a good breakdown of these leveraged acquisitions. Like a video or something that breaks down how that exactly works and why its legal and why the acquired company goes along with it. Its seems like such a strange mechanism. And the history of it.
Why would it not be legal? You can take out any loan, so long as the creditor believes in your ability to pay it back with interest, which informs how it gets priced. This is basically Finance 201 and everyone is up in arms ITT
But if that loan is used to basically acquire, or rather help another company acquire the company with the debt? So basically creating debt to facilitate mergers. But to be honest I don't fully understand all the financial engineering.
Speaking as someone who used to know absolutely nothing about the world of high finance, yes, it is too much to ask.
Before I started paying attention to such things I wouldn't have known a single one of those terms to even begin googling.
And let's be honest here. A smaller company saddled with big debt buying out an even larger company really doesn't make logical sense. It makes financial sense, which is subject to different laws of mathematics, probably involving the waiter's check pad in an Italian bistro.
Agreed that Marvin would find this (and everything about Earth) ridiculous.
I propose this would make sense in the animal kingdom though; large, lumbering fatty walks along. It has big claws, but … it doesn’t look like it can be bothered to be dangerous anymore. Meanwhile a pack of hungry successful hunters walk alongside. To take this down, they will risk pretty much everything..
It’s the same story. The shareholders provide a sort of bet on if the big guy has still got it, or the risk-on hunters do.
That’s why the operational results got attention in Cohen’s letter — he’s telling Shareholders: “I turned around GameStop. I can turn this ship around, too.”
GameStop has zero debt and billions in cash on its books. It is not a stretch for them to be making this offer. It really does make sense here for both sides.
> A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Isn’t the assumption that it’s impossible intuitively justified if you have no background in finances? A small fish usually can’t devour a bigger fish either.
Also, all those terms you mentioned mean nothing to me. You can’t search for what you don’t know exists.
For those of you thinking about taking that big paying job in big tech, let me share my experience so far. Long rant incoming...
I grinded leetcode, did well in an interview, and joined a <TRILLION DOLLAR TECH COMPANY> for the pay, which was >250k. This was a lot more than I ever made before. Great news right? Not really. My bank account is bigger but my anxiety and quality of life are worse.
I came from a job where people are really collaborative and excited to work on things together. People would often show me what they are working on without even asking and show me cool tricks related to their work. I onboarded really fast and was super productive in only a few weeks.
Since I joined <TRILLION DOLLAR TECH COMPANY> as a SWE, I've found things to be the opposite. No one is interested in talking to me at all. No one will ever volunteer information; I have to ask/demand for any and all information from people. The teams and the managers didn't lift a finger to help me learn and onboard to the service/codebase that we were working on, and I was thrust into livesite work to support production bugs and deal with customer complaints early on. The on-call period was brutal, where I'd deal with countless incidents under time pressure with little to no help and bad TSGs.
I noticed the culture difference right away. So when I was new I set up rounds of 1-1s with people on the team (since we are all remote), but they treated it like a chore and a very "political" process. I was often told to provide a list of questions for them ahead of time, and they proceeded to answer my questions exactly as asked and nothing more. I even tried to ask more open ended questions like, "what would the best thing to focus on for a new engineer working on X be?" But these kinds of questions just elicited eye rolls and shallow responses.
No one answers my questions anymore; they often just pass me on to someone else. I've asked multiple times for people to pair up on work together, so I could learn a little bit from them seeing them go through things... but no one will do it.
I talked to my manager, and the manager of our partner team (I work two teams) about this and they both just deflected and said I need to be "more demanding" and to "hound people" until they give me the information I want. They tell me not to shy away from confronting people and to be "relentless."
I don't want to work like that.
My manager has honestly given me very positive feedback, though, and is hinting at an upcoming promotion as a possibility. I've actually accomplished a decent amount despite the circumstances, but I feel like I could have been 10x more productive if the culture was different.
I don't want to have to ask every question; I'd like people to take an interest in me like they used to, and volunteer information every now and then. I'd like someone to care about me and my development, but the culture at <TRILLION DOLLAR TECH COMPANY> seems to be very self centered. People here seem to work in their own bubble where collaborating at all is seen as doing someone else's work.
I honestly hate working here at <TRILLION DOLLAR TECH COMPANY>, but I'm paid really well, so I've stuck with it for a little over a year. Things didn't get better over the year, though. I don't think I belong here anymore, and I question the hiring decision, since it seems to take a very particular type of personality to succeed in this environment. You need to be comfortable treating your coworkers like enemies, basically.
Funnily enough, I have an interview at another <TRILLION DOLLAR TECH COMPANY> (that seems to have an even worse reputation, oh no), set up this week, so I'm hoping that I do well and get another shot at it somewhere else. If it doesn't work out the second time, I'm going to give up on this whole Big Tech thing.
A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?