NEW YORK — Morgan Stanley analysts have laid out four distinct potential outcomes following eBay’s swift rejection of GameStop’s unsolicited $56 billion acquisition offer, providing Wall Street with a structured roadmap as the high-profile drama between the two retailers continues to captivate investors.

In a detailed note issued Tuesday, Morgan Stanley’s equity research team described the situation as “highly unusual” and outlined scenarios ranging from a sweetened bid by GameStop to a complete withdrawal, a proxy fight, or even a counter-offensive by eBay. The report comes just days after eBay’s board unanimously rejected GameStop’s cash-and-stock proposal, calling it “neither credible nor attractive.”

GameStop, led by CEO Ryan Cohen, formally proposed acquiring eBay at $125 per share in early May. The surprise offer represented a significant premium and stunned analysts, given GameStop’s market capitalization was roughly one-tenth the size of eBay’s at the time. eBay quickly dismissed the approach, but the move has already triggered massive volatility in both stocks and renewed meme-stock enthusiasm around GameStop.

Morgan Stanley’s base case assumes GameStop will eventually walk away, but not before extracting some form of value or concessions. In this scenario, the bank expects GameStop shares to retreat toward pre-bid levels while eBay stabilizes after the initial shock. However, the analysts warned that Cohen’s history of aggressive activism suggests he may not back down easily.

A second potential outcome involves GameStop returning with a higher offer, possibly sweetened with more cash or better terms to address eBay’s governance and strategic concerns. Morgan Stanley noted that GameStop’s substantial cash reserves — approaching $9 billion — give it credibility to pursue a revised bid, though significant regulatory and financing hurdles remain.

The third scenario envisions a proxy contest or shareholder activism campaign by GameStop. Cohen, who owns a meaningful stake in eBay through derivatives, could attempt to influence the company’s direction or push for board seats. This path would likely lead to prolonged public conflict and additional volatility for both companies.

The fourth and most aggressive outcome, according to Morgan Stanley, would be eBay launching a counter-bid or pursuing its own transformative acquisition to demonstrate strategic independence. While considered less likely, this “tit-for-tat” escalation could dramatically reshape the e-commerce landscape.

Wall Street’s reaction has been mixed. Some analysts view GameStop’s move as a bold but ultimately unrealistic attempt by Cohen to reinvent the company beyond physical retail. Others see it as a clever use of GameStop’s cash pile and activist playbook to create value for shareholders. GameStop shares have remained elevated since the bid news, reflecting sustained retail investor enthusiasm.

eBay’s rejection letter emphasized its strong standalone momentum, including healthy growth in its advertising business, structured data initiatives and international expansion. The company has been streamlining operations in recent years, divesting non-core assets and focusing on its core marketplace.

Ryan Cohen has not publicly commented since the rejection, but sources close to GameStop say the company is evaluating its options and remains committed to exploring strategic alternatives that could accelerate its transformation. Cohen’s successful turnaround of Chewy before GameStop has given him significant credibility in activist circles.

For GameStop, the eBay pursuit represents a high-risk, high-reward attempt to pivot from a declining brick-and-mortar video game retailer into a broader e-commerce player. The company has been aggressively buying back shares and accumulating cash while closing underperforming stores. However, its core business continues to face secular pressure from digital downloads and competition from Amazon, Walmart and Best Buy.

eBay, meanwhile, has worked hard to reposition itself as a premium marketplace with strong first-party tools for sellers. The company has posted consistent revenue growth and improving margins under CEO Jamie Iannone. Analysts generally believe eBay is better positioned strategically than GameStop, though the unsolicited bid has forced management to defend its independence.

The saga has reignited interest in meme stocks and activist investing. GameStop’s loyal retail shareholder base has once again mobilized on social media, with some calling for Cohen to “go all in” on eBay. Others warn that overextending could jeopardize GameStop’s strong balance sheet.

Regulatory considerations add another layer of complexity. Any formal pursuit of eBay would likely trigger antitrust scrutiny given the size of the proposed deal and overlapping e-commerce operations. The Federal Trade Commission and Department of Justice have become increasingly aggressive in reviewing technology and retail transactions.

Morgan Stanley’s analysis suggests the most probable near-term outcome is a negotiated settlement or quiet withdrawal by GameStop in exchange for certain concessions, such as a standstill agreement or minority stake. However, the bank cautioned that Cohen’s unpredictable style makes any prediction difficult.

As both companies prepare for their upcoming shareholder meetings and earnings reports, the chess match between Cohen and eBay’s board will likely remain in focus. Investors in both stocks face heightened volatility as the situation evolves.

For the broader market, the episode highlights the growing influence of activist investors with substantial cash reserves and strong retail support. GameStop’s move, whether successful or not, has already changed the conversation around eBay’s strategic options and valuation.

The coming weeks will be critical in determining which of Morgan Stanley’s four scenarios plays out. Whatever the resolution, the GME-eBay saga has already delivered one of the most entertaining and unpredictable storylines of the 2026 investment year.