Conspiracy Theory: I think the Sultan is suggesting that
$GME is about to buy Five Below
$FIVE
It matches Ryan Cohen’s public comments about targeting larger consumer businesses for these reasons:
1. Five Below sells trendy items, toys, and pop culture-adjacent goods.
2. GameStop’s recent eBay pursuit shows appetite for scaling in consumer/e-commerce spaces.
3. Five Below market cap is $11 billion but it's entering a major pullback so that could drop to $6 billion in the coming months.
With $9 billion in cash, a 25% share price premium buyout is easily achievable for GameStop.
Ryan Cohen's performance based 10% shares tranch #1 requires $20B market cap and $2B EBITDA.
Combining the market caps of
$GME $FIVE would be above $20B market cap.
GameStop annualized run-rate is around $400–600 million range now.
Five Below: EBITDA around $750–800 million. By combining both stores into one footprint the online retail business makes $2 billion EBITDA easily achievable post merger.
Basically he doubles the profitability of both companies and gets his share unlocks. This also explains why he's closing so many lower performing GameStop stores.
If GameStop purchased Five Below, closed most of its remaining GameStop stores and combined physical locations with both businesses, the annual savings would be anywhere from $600-$900 million. That puts Ryan Cohen over the $2B EBITDA performance requirement.
This doesn't even take into account that both businesses have an online store, which means a larger online presence, traffic and supply chain efficiencies.