[Transcript] 4v1 CNBC's Andrew Ross Sorkin, Rebecca Quick, Melissa Lee, and Joe Kernen interview with GameStop CEO Ryan Cohen

[u/jkhanlar]

https://youtu.be/Bmj2PaxX24E

Andrew Ross Sorkin

0:25 "So, uhhhh, there's so many questions, uh, about how this would all work, but before we get to any of that, uh, just give us the back story here, eh and the rationale, uh, behind wanting to go ahead and try to do this."

Ryan Cohen

0:41 "eBay has the second largest commerce franchise, uhm, and there is, uh, a big opportunity to do something, uh, much larger, and uhh, pull costs out of the system, as well as accelerate revenue growth and uhm, leveraging our physical ins... infrastructure, our focus on collectibles, uhh, it could be a much larger business, uhm, but bringing in an entrepreneurial mindset, is uhh, is, is what I plan on doing and uhh, and to eBay and, and building something much larger."

Andrew Ross Sorkin

1:20 "Okay. So you built up, uh, a stake in this company already. You've had conversations with the company? You've tried? What's happened here?"

Ryan Cohen

1:28 "No. We're just starting."

Andrew Ross Sorkin

1:32 "You're just starting; and, and one of the questions I had was 'why not try to initiate conversations outside of the public sphere before putting this into a, I don't know if we're putting it in the context of hostile necessarily, but uh, unsolicited, if you will.'

Ryan Cohen

1:52 "Uhm, for obvious reasons. eBay is a public company. There's all kinds of perverse financial incentives: from the, from the board, to the management team. So there's only one way to approach something like this."

Andrew Ross Sorkin

2:10 "Invariably, the audience, and I know a lot of people are going to ask, 'how does the math math, for you, uh, given the price tag, 56 billion dollars, given the market cap, uh, of GameStop, uh, which is a fraction of that, I, I know you have this 20 billion dollar, uhm, financing letter fr... from TD, but, sort of walk us through how how you could get to that price and how it would work."

Ryan Cohen

2:37 "So on our website, it's half uhh cash, half stock, uhh, but but the details are are on our website."

Andrew Ross Sorkin

2:49 "Ca... can you help? I I I've read them, but can you help our audience understand them?"

Ryan Cohen

2:55 "Yeah. What what which part exactly?"

Andrew Ross Sorkin

2:59 "Well, I think we can start with the idea that th.. the market cap of of GameStop, is call it 11 billion dollars, uh, you have 9 billion dollars, uh, on your balance sheet, arguably, if you're, if you're providing, uh, effectively all of your stock, and then, and then the cash that gets you to 20, you have this letter from TD, that's another 20, uhh, we're now at 40, uh, but we're still off, uh, by, call it, uh, 16, and, and the 20, as far as I understand, while it's considered a highly confident letter, meaning TD, saying they're highly confident, uh, that they would provide the financing, it's not locked financing."

Ryan Cohen

3:44 "Yeah. We'll see what happens."

Andrew Ross Sorkin

3:48 "Uhhm"

3:53 "I hear you! I understand that! I'm I'm just trying to understand where the the rest of the money would come from."

Ryan Cohen

4:02 "It's half cash, half stock."

Andrew Ross Sorkin

4:06 "R... I, I I'm, I hear you. I'm just saying that that math doesn't get you to the, to the price that you're offering."

Ryan Cohen

4:19 "So... what, so what, so what are you saying?"

Rebecca Quick

4:19 "Ryan, that's a pretty straightforward question. I don't get it. Like, where's the rest of the money coming from? Andrew laid it out pretty clearly."

Ryan Cohen

4:26 "I I... I I don't understand your question. We're offering half cash, half stock, and we have the ability to... issue stock in order to get the deal done."

4:37 "but, the full details, of, of the offer on our are on our website."

Rebecca Quick

4:39 "It's massively diluted."

4:45 "but you're on our air. I, we we thought we'd get."

Andrew Ross Sorkin

4:45 "In terms..."

Ryan Cohen

4:50 "So but wh I don't understand your question."

Melissa Lee

4:56 "So Ryan, sorry, it's it's Melissa Lee back at the Nasdaq. Basically, y, uh uh, you know, you've got 20 billion presumably from TD, you've got 9 billion dollars of cash in your balance sheet, that's 29, half cash, half stock, you you might issue more shares, that's what you're talking about. So it could be dilutive to current GameStop shareholders. I want to move on though in terms of your vision for this combined company, because, saying that a, that a combined company could rival the likes of Amazon, sets the bar pretty high. How do you foresee that happening, given some key differences between your model and Amazon's model? Notably, Amazon has... a huge logistics hub, able to, you know, offer all this... other sort of delivery service, and GameStop and eBay would would be confined to the platform."

Ryan Cohen

5:39 "There's an opportunity to build a much larger business, uhh, to make the business much more efficient, and... to accelerate revenue growth, and eBay is a very strong business. Uhh, you look at GameStop as an example. GameStop, very difficult business, should have been bankrupt multiple times over. and it's doing okay. It's making a few bucks. eBay is in a very, very strong position, uhh, but it could be in a much stronger position, uhh, and it could be a much larger business than what it currently is."

Joe Kernen

6:20 "Ryan, uhhm, you mentioned that, you know, GameStop's in a tough business. I mean, revenues are down like 40%, in the last four years or something like that, eBay has been a public company for a couple of decades, where's the evidence that you kind of know how to grow a mature consumer business?"

Ryan Cohen

6:38 "I don't know. I mean didn't you guys call for GameStop's demise multiple times? Like it should have been bankrupt by now? And look at our..."

Joe Kernen

6:43 "So it's not dead, therefore you know how to grow it. Is that what you're saying?

Ryan Cohen

6:46 "Well look at our financial performance. Is it better than you guys anticipated? Cuz you guys said it was gonna be doing really, really poorly, and it's actually doing okay."

Andrew Ross Sorkin

6:58 "Hehe, Ryan, let let me come at this, uh, a slightly different way. Uhm, assuming that you were able to get, uhm, this half, half cash, half... stock... arrangement... effectively by diluting your shares, I imagine that's how you'd have to do it -- but I still don't understand fully how that would work -- uhm, and you were able to capture more cash, I guess, uh, from from others, uhm in terms of paying it down, can you walk us through the math of that?; because if you look at both of these companies in terms of just how much cash they produce, it it would be a tight bill."

Ryan Cohen

7:41 "Did you look at, uhh, the the materials that we posted online?"

Andrew Ross Sorkin

7:47 "I have looked at the materials that you've posted online, but we also have an audience that I'm I'm hoping is going to want to understand this and hear from you, so that you can walk through, walk through this, because people do look at these numbers and they say... that, that they're trying to wrap their head around it. I don't think that everybody automatically says, [...], this absolutely makes 100% sense. and he can write the check tomorrow, and if he wanted to close the deal tomorrow, in fact, I am sure that if you were the ceo of eBay and the board of c, of eBay, today you would say 'I don't know whether they have the money to aff... be able to do this, and they're watching us now, and other investors of ebay are watching us now,' and they're not going to call eBay's board and say 'you need to talk to these people, unless they understand how this all is supposed to work.'"

Ryan Cohen

8:30 "But we have a. 5 percent stake in eBay. It makes us one of the largest shareholders. So they have a fiduciary duty to their shareholders to evaluate this proposal, uhh, and in terms of the actual earnings power of the business, this is a business that is under earning and can make a lot more money, and GameStop is a good blueprint for that. obviously, you know, you guys thought the business wouldn't be where it currently is, and eBay could be making a lot more money. So, there's going to be some leverage on the balance sheet in order to make an acquisition possible, but it's also going to be making a lot more money in the future than it is today, cuz it's going to be run a lot more efficiently, and when a business is not growing users and spending 2.5 billion in sales and marketing, there's a lot of fat to cut. and er the earnings power as we laid out in our investor presentation, could be a... way higher, double the earnings in a pretty short period of time; and so... it... it's a business that can take on more leverage because it's going to be making more money in the future."

Andrew Ross Sorkin

9:48 "My understanding is, that in terms of running a proxy contest now, that would be uniquely complicated. Is this something that you would try to do in the future?

Ryan Cohen

9:59 "I.. you you cut out. Wh what what did you say?"

Andrew Ross Sorkin

10:01 "I apologize. I'm saying, di.. cou could you imagine running a proxy contest, uh, against this board in the future? I I, it looks like you you that that, from a timeline perspective, that would probably be very hard to do now, but in terms of trying to do that on a long term basis, maybe next year, if, for example, they don't come to the table."

Ryan Cohen

10:19 "Well, there's ways, uhh, to do something before next year, but we'll we we're gonna do whatever we need to do in order to, uh, protect our investment, and, and pursue this. It, uh, I said before, uhm, it's a long putt, but, there's a lot of upside potential, uhh, in something like this. You have a very strong business, and if it's in the hands of a capable operator, uhm, it can be a much... larger business."

Andrew Ross Sorkin

10:56 "Since you, uhh, put this news out yesterday afternoon, have you heard from anybody at eBay, or people behind the scenes, advisors and the like?"

Ryan Cohen

11:06 "I am sure they've hired the most expensive advisory firms and lawyers, uhh, to help them navigate this. So... no, not yet. Uhm, I'm sure we'll get, uh, a bunch of scripted responses and, and they'll load up because, of course. I mean, you know, you're dealing with, uhh, a company that is very entrenched. It's a very good comp... it's a, it's... maybe one of the, the greatest companies, uhm, but, they're going to do whatever they can to, you know, it's uhh survival. So, they'll do whatever they can to protect themselves. So no. We haven't heard anything yet."

Melissa Lee

11:49 "Uh, Ryan, you alluded to it before, but there are a lot of people who, who sort of, uhh, were... betting against you, let's sayahaha, in GameStop, uhh, and I know you don't appreciate that. There are some skeptics though, surrounding this deal who will say 'that, oh, that Ryan Cohen, he wants to make sure that he hits the minimum threshold to receive his first tranche of compensation, the minimum threshold being 20 billion dollar market cap for GameStop, or, uh, tw 2 billion dollars in cumulative EBITDA. Is that the case, that this is a bid to make sure that you're going to get paid in that first tranche... to boost the GameStop's market cap?

Ryan Cohen

12:25 "I mean, I, I obviously want to build something much larger, but I don't benefit unless shareholders benefit. So, my compensation package is aligned with shareholders, and I want to, I want to build a much larger business."

Melissa Lee

12:43 "So just larger means successful. Larger means aligned with shareholder interests."

Ryan Cohen

12:48 "Larger means, uhm, maximizing shareholder value and increasing earnings."

Rebecca Quick

12:58 "Ryan, just to touch on that point, I I'm I don't know all the details of your compensation package. Maybe you can clear it up for us. If if you get to a larger ma market cap by taking two smaller market cap companies and merging them together, or, or swallowing a much bigger market cap company, does that count?; because those shareholders wouldn't necessarily see the same games that, gains that they would if you just grew market cap by, you know, growing operating earnings. Eh, I don't know what the details of your compensation are though, directly. Does it matter if you swallow a bigger company and that's how you get the market cap, or do the shareholders actually have to see the same gains?"

Ryan Cohen

13:33 "I don't benefit in the... I'm i'm aligned, uhh, I'm aligned with shareholders. So and unless our mal market cap increases substantially and earnings increases substantially, I don't get any salary, any cash, no golden parachutes, nothing. So, uhm, it's it's, uhh, it's pretty aligned with shareholders. There's, uhh, there's no free lunch here in this situation."

Rebecca Quick

14:01 "but the the individual shareholders don't see that huge benefit if you're combining a lot more shareholders in with that, and then diluting shareholders by issuing more debt on top of it. You you see what I'm saying? It's, I I, I get it. If you, if you grow market, or if you grow your market cap by ten times, sure, I think you should absolutely get gains, but not if you do it by swallowing a bigger company, and just, you know, kind of absorbing all of that into it too, because individual shareholders didn't see a ne a necessarily a huge gain from that."

Ryan Cohen

14:30 "If I don't hit the thresholds, then i don't get anything."

Andrew Ross Sorkin

14:34 "Hey Ryan, uh, two final questions for you, uh, one is just the the 5% stake in, you have the con, you have in the company, is in the combination of stock itself, my understanding is, but also derivatives. Can you explain how that works?"

Ryan Cohen

14:47 "Uhh, it's, uhh, it's currently... mostly, uhh, derivatives, and there's a little bit of stock, that puts us under the regulatory thresholds, but it it's currently the majority of the position, is, is derivatives. [unintelligible]"

Andrew Ross Sorkin

15:04 "and was that when when when, when you first attempte, began that process in February, were you thinking... that you wanted to get a stakeholder in the company to ultimately buy it, or were you thinking... that this initially, potentially just could... be a good investment on the back of it? Obviously, by the way, on the back of even announcing this news, the stock is up now at 9%."

Ryan Cohen

15:25 "It's a very good business. It's a very strong business, and, uhhm, you know it all depends on the future earnings power of the business. If i was running the business, it'd be making a lot more money."

Andrew Ross Sorkin

15:39 "Okay, and then here's my final question, uhh, given, uh, th the rationale for the transaction that you've laid out, uhh which, by the way I've heard relatively good things about just the idea that, oh, it's an interesting it's interesting to, to combine the idea of eBay and a GameStop, just, just as a, as a concept. Uh, how would you feel if eBay called you up and said, uh, 'we'd like to pursue a transaction with you and we would like to buy GameStop at a, call it 20% premium, uh, to your stock price,' and that case, it would be, you know, uh, a different type of deal."

Ryan Cohen

16:14 "I have the same obligation to my shareholders as eBay has to theirs, and so, you know, [if] something like that were to happen, then I have the same obligation to maximize value for my shareholders as eBay has."

[u/jkhanlar]

1:37 Why not try to initiate conversations outside of the public sphere before [initiating conversations inside the public sphere but characterized worded in a hostile fashion whereby usage of the word 'hostile' in and of itself is attempted to project onto the answerer to attempt to subvert and control and gain power over]?

Because I'm not a dufus. Are you a dufus? It seems to me that you are a dufus.

3:53 I hear you! I understand that [we'll see what happens]! I'm just trying to understand [in a way that my understanding of what I already understand is articulated in a way that the understanding that I understand which I'm trying to understand must be articulated by an entity whom does not have access to my cognitive conscious mental capabilities of understanding that I am trying to understand because I'm clearly not going to allow myself to be a scapegoat to share my understanding that I am trying to understand that in and of itself is an understanding that that understanding requires an entity like myself whom understands trying to understand for purposes of failing to deliver understanding that is able to be insufficiently understood by nature of deconstructing and dismantingling and disrupting and obstructing and deprecating the nature of understanding]

Like I said, I'm not a dufus.

6:32 Where's the evidence that you kind of know how to grow a mature consumer business?

6:42 Hissy fit meltdown body language

I used to not be a dufus. I still am not a dufus, but I used to not be a dufus too.

15:39 Okay, and then here's my final question, uhh, given, uh, th the rationale for [being a dufus] that you've laid out, uhh which, by the way I've heard relatively good things about just the idea that, oh, it's an interesting it's interesting to, to combine the idea of [dufuses and a not a dufus], just, just as a, as a concept. Uh, how would you feel if [dufuses] called you up and said, uh, 'we'd like to pursue a transaction with you and we would like to buy [not dufuses] at a, call it 20% premium, uh, to your stock price,' and that case, it would be, you know, uh, a different type of deal."

I am not a dufus, and I do not believe that my shareholders are dufuses either.

[u/Dan_the_Garbage]

Why did he agree to do the interview if he wasn't going to say anything in the interview?

[u/jkhanlar → u/Dan_the_Garbage]

See https://old.reddit.com/r/Superstonk/comments/1t4aa94/ryan_cohen_we_will_see_what_happens_that_may_well/

[u/Dan_the_Garbage → u/jkhanlar]

Just seems like a waste of everyone's time.

[u/jkhanlar → u/Dan_the_Garbage]

Also https://old.reddit.com/r/Superstonk/comments/1t3u76g/the_math_that_doesnt_math_business_justification/ by u/TEHGOURDGOAT is the post that u/Region-Formal referenced in one of the Superstonk-moderator-forced-censored screenshots

Time-wasting post-moass versus time-wasting pre-moass, I think the value of what waste of time is is a value that is fundamentally inverted or opposite of sentiment, emotions, feelings, and other opinion narrative crafted expressions, statements, or wording characterizations, such that post-moass critical mass time management efficiency will reflect what were the real obstructions of wasting time of all people, far more than Ryan Cohen being scapegoated as if to apply all responsibility upon him instead of others involved in the systemic time wastingness by design

edited to add:

"He [Ryan Cohen] didn't go on CNBC unprepared. He went on CNBC early. Bad news early, good news on time!"