[11/17/2021] eBay Stock Update
At the current price of $74 eBay’s stock (NASDAQ: EBAY) seems to have limited upside potential as per Trefis analysis of eBay’s valuation. In Q3 2021 the company saw a slight fall in Gross merchandise volume by 10% y-o-y to $19.5 billion. Annual active buyers for the quarter declined by 5%, for a total of 154 million global active buyers. Meanwhile revenue was recorded at $2.5 billion, up at 11% y-o-y.
We expect eBay’s revenues to rise by 7% to $11 billion for 2021, but net income to fall slightly to $2.4 billion for the year, decreasing its EPS figure to $3.47 in 2021. For FY 2022, we expect revenues to grow to $11.6 billion, increasing the EPS figure to $3.63, which coupled with the P/E multiple of 21.5x will lead to eBay’s valuation of $78, which is 5% above the current market price.
[08/26/2021] eBay’s Stock To Rise As Focus Continues On Core Business?
eBay’s stock (NASDAQ: EBAY) has seen a rise of 48% to $74 since the end of 2020 compared to Trefis’ eBay’s valuation of $78. In comparison, the S&P 500 rose by 20% since the end of 2020. On June 24, 2021, the company announced it reached an agreement to sell 80.01% of its eBay Korea business to Emart for approximately $3 billion. They also completed the sale of classified business to Adevinta on June 24th for $13.3 billion, which included $2.5 billion in cash and approximately 540 million shares of Adevinta stock (44% ownership). The company further entered into an agreement to sell approximately 135 million shares of eBay’s Adevinta stock to Permira for over $2.4 billion, reducing their ownership of Adevinta to 33%. Hence, eBay continues its focus on simplifying their portfolio and concentrating on the core business. The company has continued to scale its management of payments globally, launching a new experience for sellers in all markets which saw migration of over 13 million sellers to the platform at the end of Q2 2021. The company recorded revenue of $2.7 billion, up 14% y-o-y for Q2 2021. We expect the company to continue its focus on the core business and think that the market has nearly priced in these developments.
We expect eBay’s revenues to rise by 23% to $12.6 billion for 2021. Further, its net income is likely to increase to $2.6 billion, increasing its EPS figure to $3.73 in 2021. For FY 2022, we expect revenues to grow to $13.2 billion, increasing the EPS figure to $3.96 which coupled with the P/E multiple of 19.6x will lead to eBay’s valuation of $78, which is 5% above the current market price.
[07/06/2021] Will The Gains For eBay’s Stock Continue?
eBay’s stock (NASDAQ: EBAY) has seen a rise of 40% since the end of 2020 and as per Trefis’ valuation is now in line with its near term potential. In comparison, the S&P 500 rose by 16% since the end of 2020. Despite the coronavirus crisis, eBay saw its revenue and earnings rise in 2020 as there was an increasing shift toward online marketplaces compared to traditional brick and mortar stores. In FY 2020 the company registered a revenue growth of 19% y-o-y while earnings from continuing operations grew to $3.58 for the year compared to $1.79 in the previous year. The momentum continued in Q1 2021 as the company recorded revenue of $3.0 billion, up 42% y-o-y while Gross Merchandise Volume (GMV) was $27.5 billion, up 29% y-o-y. Further, annual active buyers grew by 7% y-o-y, to 187 million globally and annual active sellers grew by 8% y-o-y, to 20 million globally. We expect this momentum to continue for the year and think that the market has already priced in this growth.
We expect eBay’s revenues to rise by 23% to $12.6 billion for 2021. Further, its net income is likely to increase to $2.6 billion, increasing its EPS figure to $3.73 in 2021, which coupled with the P/E multiple of 18.7x will lead to eBay’s valuation of $70, which is in line with the current market price.
[Updated 01/08/2021] Does eBay’s Stock Have More Than 20% Upside?
Having gained more than 43% in 2020, eBay’s stock (NASDAQ: EBAY) still has further growth potential of about 20% in the near term. EBAY’s stock has rallied from $36 to $52 in 2020 compared to the S&P 500 which moved 14% in the same period. The company has seen good revenue growth over recent years, while its P/S multiple has remained flat. We believe the stock, after the recent rally, still has potential for further growth.
Due to the Covid-19 crisis, consumers have shifted toward online marketplaces, which benefited eBay as it saw its revenues rise by 10% in the first nine months of the year, compared to the same period in the previous year. In Q3 2020, eBay beat consensus estimates for revenue recorded at $2.6 billion, up 25% y-o-y and earnings recorded at $0.95 compared to $0.37 in the same period of the previous year. Further, the company reported $1.66 billion in cash inflows from operating activities for the first nine months. Trefis estimates Net Income to increase to $1.9 billion for 2020, increasing the EPS to $2.68. Thereafter, revenues are expected to grow to $11.9 billion in 2021. In addition, the EPS figure is likely to improve to $2.96, which coupled with the P/E multiple of around 21x will lead to eBay’s valuation of $63, up more than 20% from the current market price.
While EBAY stock is likely to move higher in the near term, there are several peers in its sector that look like a Better Bet Than EBAY Stock. Also eBay Peer Comparisons summarizes how the company fares against peers on metrics that matter.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.