What Can Move eBay’s Stock 10% In The Next 1-2 Years?

April 6th, 2016 by Trefis Team
-6.10%
Downside
52.02
Market
48.85
Trefis
EBAY: eBay logo
EBAY
eBay

eBay (NASDAQ:EBAY) has been struggling to effectively compete in the online marketplace in the last couple of years, especially against behemoths Amazon (NASDAQ:AMZN) and Google Shopping (NASDAQ:GOOG). eBay’s average active users grew by a mere 3% to 158 million in 2015 and overall revenue actually declined by 2% year over year, owing to increased competition and the company’s search engine optimization (SEO) issues. In our eBay valuation model, we forecast eBay’s active user base to grow at similar rates going forward on account of the aforementioned factors.

However, if eBay manages to grow its active user base at an accelerated 7% CAGR over the next five years, there can be an upside of over 10% to the company’s valuation. This higher growth rate is possible if eBay effectively addresses the following issues:

  1. Fixing SEO issue to drive higher traffic to site
  2. Ensuring 100% listings are classified in product categories on their website.
  3. Improving shipping services and experiences for sellers and customers e.g. Shyp partnership
  4. Improving brand image and rebuilding customer trust.ebay21

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Have more questions about Ebay? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ebay
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