Squawk Pod Host (2:07)

Plus the latest in Iran and a recap from the Berkshire Hathaway annual shareholder meeting over the weekend.

Mike Santoli (2:14)

Longtime CEO Warren Buffett was seated throughout in the very front row, of course. It's the first time in 60 years he's been watching from the audience.

Squawk Pod Host (2:23)

It is Monday, May 4th, and Squawk Pod begins right now.

Andrew Ross Sorkin (2:28)

Stand by in 3, 2, 1. Q please.

Melissa Lee (2:34)

Good morning and welcome to Squawk Box here on cnbc. I'm Melissa Lee along with Becky Quick and Mike Santoli. Becky is in Omaha, Nebraska following Berkshire Hathaway's annual shareholder meeting. We'll get to the highlights in Just a moment. Mike was there too, by the way.

Mike Santoli (2:46)

Well, Saturday, as everybody knows, was the Berkshire Hathaway annual meeting right here in Omaha. Mike was here as well for the whole week. And this was the first with the new CEO Greg Abel at the helm, he took the stage, offered a business update, took a lot of shareholder questions as well. Longtime CEO Warren Buffett was seated throughout in the very front row. Of course, it's the first time in 60 years he's been watching from the audience instead of up on stage. Notable attendees included actor Bill Murray, golfer Bryson DeChambeau, Apple CEO Tim Cook, who brought his name, successor John Ternus, also Buffett family members who were there throughout. Greg Abel took the stage a little after 9:00am Eastern time with a surprise for Warren Buffett, asking everybody to look up as a jersey was raised inside the arena retiring. Buffett's number, as he said, Number 60 was the number that they gave him on this. That's for the number of years that he was the CEO of Berkshire Hathaway also had a retirement jersey that they were putting up there for Charlie Munger, too, 45 years that Munger served as vice chairman at Berkshire Hathaway. Abel spent more than an hour detailing the business operations of Berkshire and then moved to take those shareholder questions. He was joined on stage by a few of Berkshire managers throughout the morning, too. And the theme here was really focusing on performance across the company's vast holdings, telling the crowd that this is where he intends to focus when it comes

Greg Abel (4:14)

to allocating the time. Yes, there's a certain amount of time spent on operations, and we'll prioritize that because we see a huge opportunity to continue to improve and close those gaps and operational excellence. We see opportunities within our existing portfolio, but that is either adding to them or right, sizing it and then constantly evaluating what other opportunities are out there.

Mike Santoli (4:46)

That's something we heard here on Squawk Box Friday from lead director Sue Decker as well. Abel was also asked about the company's stock portfolio and his plans there.

Greg Abel (4:56)

A very significant portion of our total investments are highly concentrated and sit across a limited portfolio. The active management of that is really limited is really what I'm highlighting. We know those businesses well. We know the management teams. Those are the things that Warren and I would still be absolutely collaborating on and discussing. We don't have to discuss them every day, but if there's something going on across those businesses, we'd be discussing it that week or that month. And maybe it's where they're going or

Mike Santoli (5:32)

what we've learned that answer was in response to a question about how he was going to be spending his time because Greg Abel is a known operator compared to Warren Buffett, who was a stock picker through all that time. There's still a $300 billion stock portfolio. And Greg's position on that is, look, a lot of that is kind of self run. You really don't have to worry about it as much. At least 200 billion dol of it, he says, is stuff that's kind of on autopilot. Warren Buffett actually addressed the meeting right off the top as well. And he called out one of Berkshire's most successful investments.

Greg Abel (6:04)

Ten years ago, we made a commitment to essentially move 10% of the resources of Berkshire Hathaway. We turned it over to another, a person who was not that well known at the time. And we did that by spending roughly $35 billion buying stock in Apple Corp. And we were going to have that under the management. We're turning that money over to the management essentially of Apple to make Berkshire look good and without any work by us, which is our preferred way of operating. And I would like to report that 10 years later, several things are happening. One is the 35 billion counting dividends, realized appreciation, unrealized appreciation. But that has turned into 185 billion. And I didn't have to do a damn thing.

Mike Santoli (7:39)

We also heard from a friend of Squawkbox and Berkshire shareholders since the 1970s, actor Bill Murray. He joined Mike and I in Saturday's livestream on CNBC.com, and he had some pretty interesting insight on what it might have been like for Warren Buffett to be watching the show from the audience instead of being on stage for the first time in 60 years.

Andrew Ross Sorkin (8:01)

I was in a show once and for some reason I came late and my understudy went on in the show and I got to sit and watch our show. Only one of us that ever got to see our show. And it was fantastic. I thought, God dang, this is really good. I was really happy to see that.

Greg Abel (8:17)

So I think he's going to have

Andrew Ross Sorkin (8:19)

that same experience of what it's like to be there as a shareholder and

Becky Quick (8:24)

to see how the story goes down,

Andrew Ross Sorkin (8:27)

how Greg tells the story.

Mike Santoli (8:29)

We asked Bill what show he was talking about. He said it was an off Broadway production of National Lampoon or of Harvard Lampoon. And he said it was a production that he was in with his brother Brian. He was there, there with Gilda Radner, Harold Ramis, John Belushi and Paul Jacobs was on the piano and he said, you know, kind of asked, did you do that often? He said no, he only did it once. And asked if he got in trouble about it. He said no because it was just those guys, so they didn't get mad. But he said it was a fantastic show and it was a really different feeling. And Mike, I thought that was a pretty good analogy for what it might have been like for Warren Buffett sitting

Andrew Ross Sorkin (9:04)

there too, for sure.

Becky Quick (9:06)

I mean, Bill had to show up the next day and actually do the job again. Warren gets to let Greg have the stage. It also occurred to me that, you know, what's it going to be for Lorne Michaels successor one day if he ever gives up the reins after 51 years at SNL, Bill might have something to say about that as well. In corporate news this morning, video game retailer GameStop making an offer to acquire eBay for $125 per share in cash and stock. It's about a 20% premium to Friday's close for eBay. The bid values eBay at close to $56 billion. In a statement, GameStop says it has built a roughly 5% stake in eBay and secured a commitment letter from TD bank for up to $20 billion in debt financing. GameStop CEO Ryan Cohen telling the Wall Street Journal he sees a path to making ebay a much bigger competitor to Amazon. We're going to speak with Ryan Cohen in a can't miss interview. You know, look, obviously a long shot bid, it's a smaller competitor taking on a bigger one. We just saw it with Paramount and Warner Brothers Discovery. But interesting. I mean, it's not like the market's taking this as a foregone conclusion and of course we can talk about it, but there was a new compensation incentive plan for Ryan Cohen that's very tied to the total market cap of GameStop. If it gets past $100 billion, this would be kind of one big leap to get it very close in that direction.

Melissa Lee (10:28)

I would like to, though, put a little asterisk next to the sentence that you just uttered in terms of it being unlikely. Yes, it is, of course, unlikely. But a lot of things about the Gamestop story was very unlike 100%.

Andrew Ross Sorkin (10:39)

Absolutely.

Melissa Lee (10:40)

Like to discount the story too much would maybe be jumping to conclusions because we did see it come basically back from the dead in this meme stop, you know, meme stock mania.

Becky Quick (10:50)

Sure.

Melissa Lee (10:50)

That really helped game.

Becky Quick (10:51)

And look, we're kind of back in that moment. I mean, we were talking about Avis budget that was very 2021. So there's no doubt that, that there is a constituency of equity traders out there that's willing to, to hand money to ryan Cohen through GameStop shares and maybe get that done. You know, ebay has actually had a little bit of a revival, but it's long been kind of a slow grower in past peak day.

Melissa Lee (11:13)

Question is, do ebay shareholders really want GameStop stock, which.

Becky Quick (11:16)

Exactly.

Melissa Lee (11:17)

Volatile and you know, 50% of the bid. That's going to be a huge sort

Mike Santoli (11:20)

of no doubt about roadblock as the thing I would bring up with that is, you know, Elon Musk put that in vogue to tie your compensation and big jumps in compensation to a big jump in market cap, which makes complete sense, but because you are tying your performance to the shareholders performance. But if you get to that market cap by swallowing another company, you know, you might look at that a little differently. It's not like the shareholders got the sort of gains that you would assume they would have gotten by tying your compensation to that.

Becky Quick (11:48)

Yeah, and not only that, Becky, but once that threshold is met, if the compensation, you know, award is triggered, what it means is Warren Cohen gets a big old chunk of stock, so the rest of the investors get diluted out, you know, having gotten the market cap to that level. But you know, we'll see. Obviously the share price is going to determine whether this is, this is something that has the endorsement of the market.

Mike Santoli (12:11)

Right. Just from a corporate governance tying your, your package, your compensation package, the CEO's compensation package to big jumps in the market cap generally that would get a stamp of approval from corporate governance experts getting it. Maybe, maybe there needs to be definitions of how you get to that market cap is at some point too though, just to make sure that it truly does align with other shareholders.

Andrew Ross Sorkin (12:32)

Right.

Becky Quick (12:33)

Yeah. I do think there are other provisions of the comp plan, so, you know, in every detail, I'm not quite sure. But it is interesting that that's, that's the way to do it and we'll see. I mean, you know, it is interesting how collectibles matters a lot both for GameStop and eBay. Naturally, that's the linkage.

Mike Santoli (12:49)

Right.

Becky Quick (12:49)

But be interested to see his rationale beyond that.

Melissa Lee (12:54)

Well, Iran's military warning US forces to stay out of the Strait of Hormuz. That followed a message from President Trump saying US will help guide ships stuck in the Persian Gulf out of the Strait of Hormuz in an operation he calls Project Freedom. On Truth Social, the President said many ships were running low on food and supplies. He wrote. If in any way this humanitarian process is interfered with, that interference will unfortunately have to be dealt with forcefully. We do want to get to a turn that we're watching in futures as well as oil prices. Right now Iran's Far South News Agency is reporting that a US Warship was turned back near Jask island near the Strait of Hormuz. This after it ignored Iran's warnings and was hit by two missiles. We were watching crude prices jump pretty sharply. WTI up by 4.4% right now 106 is the level there. ICE Brent up by 5%. 113 futures. Meantime, we did see a drop immediately. We're off of the lows off the back of that news. Now we're back to them. S&P 500 down 37. Dow futures down by 347. The NASDAQ down 151. Of course we'll continue to watch, but this is sort of the uncertainty, you know, about the Project Freedom operation that President Trump announced, getting the ships through the Strait of Hormuz. Nobody really knew what was going to happen. Iran had indicated that any sort of military action, any sort of escort would be a violation of the cease fire agreement. So we didn't really know what was happening. And that's probably why we saw crude oil, you know, go lower at first but then resume its path higher for sure.

Becky Quick (14:22)

And you know, it's just going to test the market's ability, which it showed for a month to kind of withstand a lot of the uncertainty about the Middle east and you know, rely on things like semiconductors in the BitMag 7 to kind of insulate the market from, from a lot of the damage. Maybe we're at a high enough perch. We're going to have to give a little back and account for that. Yeah, of course.

Melissa Lee (14:41)

We'll keep my eyes.

Mike Santoli (14:42)

I want to just say, yep, just on the headlines on this, I mean, this brings up a question that came up at the Berkshire Hathaway meeting this weekend as well. There's been this talk of who would be insuring the boats that go or the ships that go through the Strait of Hormuz. It's been a big question and the US Obviously has tried to gather some of these insurers to make sure that there is a path for making sure you get the insurance because boats can't move without insurance. If they're afraid to go through. If you can't get insurance, they're not going to be moving through that strait. Ajit Jain, the vice chairman Here at Berkshire, of Berkshire's insurance operation was asked about that what would it take for Berkshire to be insuring any of these ships going through the straits. And his, you know, knee jerk reaction was it depends on the price. Well, I will tell you with a situation like this, if this is true from these reportsagain, this is Iranian state media. If this is true from these reports, the price of that insurance just went up drastically. He had pointed out that Berkshire had been in talks for it. There would be situations under which they would go along with it. It would have to be not only price, but the idea that the US Navy was escorting those ships to that point. He said they had not written any of that insurance. There are others who were. And Jane's point was that those are companies that have some excess cash that they feel like they want to put to work. But if this is true, the pricing on that insurance just went up drastically.

Melissa Lee (15:59)

Yeah. And unclear who will pay that at this point. Becky, we're going to keep an eye on the situation. Of course, we are seeing continued pressures here on the futures as well as oil.

AT&T Business Wireless Advertiser (16:12)

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Squawk Pod Host (16:14)

Coming up on Squawk Pod.

Andrew Ross Sorkin (16:16)

It is 4am in Los Angeles where I am.

Squawk Pod Host (16:19)

Andrew joins the crew for a can't miss conversation. GameStop has proposed an acquisition of ebay, but the companies have not yet spoken to each other about it. That is not actually what we're hung up on. It's the financing that we're zeroing in on. GameStop CEO Ryan Cohen fields our questions on the funding.

Ryan Cohen (16:40)

Yeah, we'll see what happens.

Andrew Ross Sorkin (16:43)

I hear you. I understand that. I'm just trying to understand where the rest of the money would come from.

Ryan Cohen (16:49)

Half cash, half stock.

Andrew Ross Sorkin (16:51)

I hear you. I'm just saying that that math doesn't get you to the price that you're offering.

Squawk Pod Host (16:58)

That interview is right after this.

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Commercial Narrator (18:02)

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Commercial Narrator (18:55)

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Squawk Pod Host (19:04)

Welcome back to Squawkpod. Over the weekend, video game retailer Gamestop announced it was making an unsolicited non binding offer to buy eBay at $125 a share, a deal valued at $55.5 billion and a stock price higher than ebay's. As of Friday's close, the deal would be half cash and half stock, and GameStop has already built up a 5% stake in eBay. Here's the rub. GameStop's market cap is around $11 billion. It's got a little over 9 billion on the balance sheet in cash. It secured a quote highly confident letter from TD suggesting it could secure another 20 billion from TD. So the half cash part of the proposed deal could be covered, but the half stock? That's trickier. GameStop does not have at this moment $25 billion worth of stock. The only way to hit the number needed to satisfy the deal that Gamestop itself proposed would be to issue more stock, massively diluting existing shareholder value. And even then, issuing more stock doesn't guarantee that the stock will be worth over $25 billion. Remember, GameStop has a famously volatile stock TBT. To the whole meme stock mania, it's worth noting Ryan Cohen's track record as CEO of GameStop. He joined the board in 2021 right after that short squeeze, and he started as the CEO in 2023. Since then, he's put profit back on the company's PNL through cost cuts and store closures. Still, the financing of this proposed deal for ebay is a pickle. One our audience and our anchors picked up on. You are now caught up on GameStop's proposal. Here is Andrew Ross Sorkin.

Andrew Ross Sorkin (20:53)

The big deal news of the day. Gamestop offering to buy eBay for 56 billion. The stocks are both up big in the last month in the premarket. CEO Ryan Cohen saying that combined company will be a real competitor to Amazon. And joining us right now live and exclusively is the man himself, Ryan Cohen. Good morning and thank you for joining us.

Ryan Cohen (21:16)

Morning.

Andrew Ross Sorkin (21:17)

It's great to see you. So there's so many questions about how this would all work, but before we get to any of that, just give us the back story here and the rationale behind wanting to go ahead and try to do this.

Ryan Cohen (21:32)

Ebay has the second largest commerce franchise and there is a big opportunity to do something much larger and pull costs out of the system as well as accelerate revenue growth and leveraging our physical infrastructure. Our focus on collectibles can be a much larger business, but bringing in an entrepreneurial mindset is, is, is what I plan on doing into, into ebay and building something much larger.

Andrew Ross Sorkin (22:11)

Okay, so you've built up a stake in this company already. You've had conversations with the company. You've tried what's happened here?

Ryan Cohen (22:19)

No, we're just starting.

Andrew Ross Sorkin (22:22)

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 in the context of hostile necessarily, but unsolicited if you will, for obvious reasons.

Ryan Cohen (22:42)

Ebay is a public company. There's all kinds of perverse financial incentives from, from the board to the management team. So there's only one way to approach something like this.

Andrew Ross Sorkin (22:58)

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

Ryan Cohen (23:25)

It's on our website. It's half cash, half stock. But, but the details are, are on our website.

Andrew Ross Sorkin (23:37)

Can you help? I've read them, but can you help our audience understand them?

Ryan Cohen (23:43)

Yeah. What, which part exactly?

Andrew Ross Sorkin (23:47)

Well, I think we can start with the idea that the market cap of GameStop is call it $11 billion. You have $9 billion on your balance sheet, arguably, if you're, if you're providing 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. We're now at 40, but we're still off by. Call it 16 and the 20. As far as I understand, while it's considered a highly confident letter, meaning TD saying they're highly confident that they would provide the financing, it's not locked financing.

Ryan Cohen (24:31)

Yeah, we'll see what happens.

Andrew Ross Sorkin (24:37)

I hear you. I understand that. I'm just trying to understand where the rest of the money would come from.

Ryan Cohen (24:45)

Half cash, half stock.

Andrew Ross Sorkin (24:47)

I hear you. I'm just saying that that math doesn't get you to the, to the price that you're offering.

Mike Santoli (24:56)

So 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 (25:06)

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. But the full details of the offer on our are on our website.

Mike Santoli (25:21)

But you're on our air. We thought we'd get.

Ryan Cohen (25:24)

But I don't understand your question.

Melissa Lee (25:28)

So, Ryan, sorry, it's Melissa Le back at the NASDAQ. Basically, you know, you've got 20 billion, presumably from TD. You've got $9 billion of cash on your balance sheets. That's 29. Have cash, have stock. 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, that a combined company could rival the likes of Amazon sets the bar pretty high. How do you foresee that happening, happening given some key differences between your model and Amazon's model? Notably, Amazon has a huge logistics hub able to offer all this other sort of delivery service. And GameStop and eBay would, would be confined to the platform.

Ryan Cohen (26:09)

There's an opportunity to build a much larger business to make the business much more efficient and to accelerate revenue growth. And ebay is a very strong business. 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, but it could be in a much stronger position and it could be a much larger business than what it currently is.

Becky Quick (26:50)

Ryan, 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 (27:07)

I don't know. I mean, didn't you guys call for GameStop's demise multiple times?

Becky Quick (27:12)

Like, so it's not that therefore you know how to grow it? Is that what you're saying?

Ryan Cohen (27:16)

Well, look at our financial performance. Is it better than you guys anticipated? Because you guys said it was going to be doing really, really poorly, and it's actually doing okay.

Andrew Ross Sorkin (27:27)

Ryan, let me come at this a slightly different way. Assuming that you were able to get this half, half cash, half stock arrangement, effectively by diluting your shares, I imagine that's how you have to do it, but I still don't understand fully how that would work. And you were able to capture more cash, I guess, from. From others 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 would be a tight bill.

Ryan Cohen (28:08)

Did you look at the materials that we posted online?

Andrew Ross Sorkin (28:12)

I have looked at the materials that you've posted online, but we also have an audience that I'm hoping is going to want to understand this and hear from you so that you can walk through this. Because people do look at these numbers and they say that they're trying to wrap their head around it. I don't think that everybody automatically says, oh my goodness, 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, of ebay today, you would say, I don't know whether they have the money to 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 (28:55)

Well, we have a 5% stake in eBay. It makes us one of the largest shareholders. So they have a fiduciary duty to their shareholders to evaluate this proposal 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 is 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 because it's going to be run a lot more efficiently. And when a business is not growing users and spending two and a half billion in sales and marketing, there's a lot of fat to cut. And the earnings power, as we laid out in our investor presentation, could be way higher, double the earnings in a pretty short period of time. And so 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 (30:13)

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 (30:23)

You cut out what.

Andrew Ross Sorkin (30:25)

I apologize. I'm saying, could you imagine running a proxy contest against this board in the future? It looks like 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 (30:43)

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

Andrew Ross Sorkin (31:19)

Since you put this news out yesterday afternoon, have you heard from anybody at ebay or people behind the scenes, advisors and the like?

Ryan Cohen (31:27)

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

Melissa Lee (32:10)

Ryan, you alluded to it before, but there are a lot of people who sort of were betting against you, let's say in GameStop. 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 a minimum threshold to receive his first tranche of compensation. The minimum threshold being $20 billion market cap for GameStop or $2 billion in cumulative EBIDA. 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 (32:47)

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 (33:04)

So just, larger means successful. Larger means aligned with shareholder interests.

Ryan Cohen (33:09)

Larger means maximizing shareholder value and increasing earnings.

Mike Santoli (33:18)

Ryan, just to touch on that point, I don't know all the details of your compensation package. Maybe you can clear it up for us. If you get to a larger market cap by taking 2 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 gains, the gains that they would if you just grew market cap by, you know, growing operating earnings. 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 (33:52)

I don't benefit and I'm, I'm aligned, I'm aligned with shareholders. So. And unless our market cap increases substantially and earnings increases substantially, I don't get any salary, any cash, no golden parachutes, nothing. So it's, it's, it's pretty aligned with shareholders. There's.

Mike Santoli (34:20)

But 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 see what I'm saying? I get it. If you grow market. Or if you grow your market cap by 10 times, sure, I think you should absolutely get gains, but not if you do it by swallowing a bigger company and just kind of absorbing all of that into it too. Because individual shareholders didn't see necessarily a huge gain from that.

Ryan Cohen (34:49)

If I don't hit the thresholds, then I don't get anything.

Andrew Ross Sorkin (34:52)

A Ryan, two final questions for you. One is just the 5% stake and you have, the, 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 (35:04)

It's, it's currently mostly derivatives and There's a little bit of stock that puts us under the regulatory thresholds, but it's currently the majority of the position is. Is derivatives.

Andrew Ross Sorkin (35:21)

And was that when, when. When you first attempted, 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 9%.

Ryan Cohen (35:41)

It's a very good business. It's a very strong business. And, you know, it all depends on the future earnings power of the business. I was running the business. I'd be making a lot more money.

Andrew Ross Sorkin (35:55)

Okay, and then here's my final question. Given the rationale for the transaction that you've laid out, which, by the way, I've heard relatively good things about just the idea that. Oh, it's an interesting. It's interesting to combine the idea of ebay and a GameStop just, just as a. As a concept. How would you feel if ebay called you up and said, we'd like to pursue a transaction with you and we would like to buy GameStop at a. Call it 20% premium to your stock price? In that case, it would be, you know, a different type of deal.

Ryan Cohen (36:30)

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.

Andrew Ross Sorkin (36:45)

Ryan Cohen, we want to thank you for joining us, especially as this news is just dropping over the past 24 hours. And we do hope to continue this conversation as this continues to play out. Thanks, Ryan.

Squawk Pod Host (36:58)

Next up on Squawk Pod, Open Air is reportedly finalizing a $10 billion joint venture with private equity firms. Founder and editor in chief of the Information, Jessica Lesson joins us.

Jessica Lessin (37:10)

It's a land grab, I think. In recent months, we've seen a shift from the focus on consumer at OpenAI to Enterprise, in part because of concerns about anthropic. So I'd expect more of these partnerships and I think with a wide variety of firms.

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We're back after this.

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Andrew Ross Sorkin (39:03)

OpenAI has raised more than $4 billion for a new joint venture that's going to focus on helping businesses adopt its AI software, according to a Bloomberg report that says the deal values the company at $10 billion. Other backers include TPG, Brookfield Asset Management, SoftBank and Bain Capital. Meantime, the Musk vs Altman trial entering its second week, the Clash between the two of Silicon Valley's most influential leaders emerging as a defining dispute over OpenAI's governance and long term strategies strategy. Doing this right now is Jessica Lesson, the Information founder, editor in chief and CEO. Good morning to you. Help us handicap it Based on everything you saw, know and watched last week, what do you think the possibilities are in terms of how this could all go?

Jessica Lessin (39:50)

So Musk still has long odds in this trial, Andrew. He always has to prove what he needs to prove. He has to show that a con there was fraud. There was a contract, it was broken open. The eyes argument is we kept you in the loop. We gave you options as we needed to raise more capital and change our structure. It basically boils down to that. Was there a contract that Sam Altman and Greg Brockman broke? There are plenty of fireworks last week. As expected, some good barbs landed, but that's still the fundamentals of the case. And I think and lawyers we speak to at the Information think it's a tough one for Musk to pull away with.

Andrew Ross Sorkin (40:31)

If Musk were to, quote, unquote, win in some way, what do you think that could even look like if you're the judge in this case, given all of the. I mean, I can't imagine. Maybe I can imagine if you were to win that they would say, okay, this company can never go public, but I can't imagine how it could even be.

Jessica Lessin (40:52)

Look, Musk has said that, well, he wants many things. He wants Greg and Sam out of the room, which I also don't think will happen. But he wants the for profit entity that was created from the nonprofit to give a huge sum, 180 billion, back to the nonprofit. And I still think there is a chance for the settlement. The information reported in the days ahead of this trial that there have been a lot of intermediaries going back and forth. There was a filing over the weekend that showed Musk reached out to Brockman just a few days ahead of the trial. I think that's still a possibility, although they're certainly landing their punches in court. But at the end of the day, I think Musk can pull out a win if he frames it a certain way. If there is some funding going back

Andrew Ross Sorkin (41:38)

to the nonprofit, a lot of that funding could come later this year. And if in fact there is an ipo, there's a lot of questions about an ipo. Lots of. There was a story over the weekend, a good story about Sarah Fryer in the Wall Street Journal, the CFO of the company. But also there's been questions about whether she and Sam Altman are on the same page. The company's insisted that they are. What do you know?

Jessica Lessin (42:05)

So about a month or so ago, the information was the first report about this. I look CFOs and CEOs debate timing for going public. I think everyone's a little ahead of, ahead of their skis on the timing of this IPO. I think, yes, there are preparations. Yes, OpenAI is going to need to raise a next round of capital from the public markets. They just raised more than 100 billion privately. I also think there are questions honestly of how much they can deploy given the pace of infrastructure spend and building right now. So yes, there are preparations. I think they are looking over their shoulder to anthropic because people want to get out first. But what we've been reporting now for more than a month at the information is that a lot of these things come down to, you know, I think a CEO who's chomping at the bit and a CFO who's saying, you know, how, how consistent Is our revenue going to be at this point? How predictable is it? So I think we're a little ahead of our skis on this timing of thinking for this year things could change, but I, but I feel like we're pushing out into next year at this point.

Andrew Ross Sorkin (43:12)

One of the interesting aspects of what's happening with Open Air we just reported, as I was discussing right before you came on, is this idea that these, these companies are now partnering with private equity firms which have huge portfolios of companies to try to get their AI models into those portfolio companies to start using them in a real use case scenario. Do you look at that? I mean, it's a, it's a way clearly to accelerate the process. But is that because it's not accelerating enough on its own? Meaning do you think of this as a good sign or a bad sign

Jessica Lessin (43:48)

somewhere in the middle, to be honest? Because obviously these deals like Open Air and Anthropic, which actually did the first PE consortium a couple months ago, are giving away sometimes like hefty fees as part of this. But look, there's an enterprise race underway and it's a race to get these APIs far and wide. And I think we're going to see partnerships not just with private equity firms, but with software companies and all sorts of third party distribution to try and win this enterprise war. I think the sums of some of these deals right now just suggest we're kind of in this AI fever a little bit because it's not even clear what all these companies are going to do right away, but it's a land grab. I think in recent months we've seen a shift from the focus on consumer at OpenAI to Enterprise, in part because of concerns about Anthropic. So I'd expect more of these partnerships and I think with a wide variety of firms.

Andrew Ross Sorkin (44:46)

And then finally, wanted to talk about the White House. DealBook reported this morning that Senator Pichai was at the White House on Thursday about cybersecurity. That was the, the point of the meeting, but it turned into a conversation about compute. How much compute did Google have in the context of, you know, how the government plans to try to use its models at a time when they've been very concerned about the COMPUTE or the lack of computer that may be available, for example, from Anthropic going forward, given Mythos and that preview model, how far behind do you think these companies are broadly?

Jessica Lessin (45:24)

It's hard to say because they're going in lockstep. You know, I think they each want to spend $1 more than the next guy because it really is an arms race. I mean, you get any Silicon Valley CEO in a room right now and they'll want to talk to you about COMPUTE and how they need more. We know that Anthropic in particular is facing shortages that are probably going to be affecting revenue down the line. So, yes, it's important, but they haven't even built all this compute that they bought and agreed to and sold. So it's really hard to keep track. Obviously, their COMPUTE is scaling, but I think it is a number one issue for these CEOs, as evidenced from that White House meeting. And I think they're going to push hard to get the government on their side, especially when the public is pushing back.

Andrew Ross Sorkin (46:09)

Jessica, it is great to see you. Thank you for waking up early with us this morning on the West Coast. I happen to be on the west coast with you this morning, so I'm up early, too.

Jessica Lessin (46:19)

You got up a little earlier, so good work.

Andrew Ross Sorkin (46:21)

Nice to see you. Thanks.

Squawk Pod Host (46:25)

That's Squawk Pod for today. Thank you for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Annoying, Andrew Ross Sorkin weekday mornings on cnbc starting at 6 Eastern. Thanks to Melissa Lee and Mike Santoli for sitting in today to get the best bits of our TV show, plus a little extra, including things like our coverage of the Berkshire Hathaway annual shareholder meeting. You've got to subscribe to Squawkpod wherever you're listening now. We'll meet you right back here tomorrow. And in the meantime, go check out those Berkshire podcasts. Have a great day.

Becky Quick (46:57)

We are clear.

Andrew Ross Sorkin (46:59)

Thanks, guys.

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