How Is eBay Dealing With Increased Competitive Pressure?

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EBAY
eBay

eBay (NASDAQ:EBAY) continues to grapple with investor concerns over the company losing GMV share amid an evolving e-commerce landscape. However, the company’s initiatives to realign its portfolio to enable growth could provide additional value to its shareholders going forward.

We currently have a price estimate of $37 per share for eBay, which is around 30% higher than the current market price. Our interactive dashboard on eBay’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

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eBay’s Q3 results surprised the markets with in line revenue growth (+6% y/y) and an EPS beat. However, another decline in its GMV share was not received well by the markets. Q3 also saw a few important announcements, with the company announcing up to $100K credit access to eligible merchants, a promising update on the company’s new payments business, integration with Apple Pay, the sale of its Flipkart stake to Walmart for over $1 billion, and eBay’s intent to acquire Motors.co.uk (a UK-based classified site). The company also updated its annual guidance, with expected revenue for fiscal 2018 of $10.72- 10.76 billion and non-GAAP EPS of $2.29-2.67.

The slowdown of eBay’s GMV is a concern, as the market is getting increasingly competitive. But while eBay’s payments transition, competition from Amazon, Walmart and Target’s e-commerce business, and declining consumer interest in the discount e-commerce business, have all weighed on eBay’s stock of late, the market seems to be overlooking that most of eBay’s GMV growth is coming from outside the US. Additionally, growth in eBay’s classified business and better payments terms (with lesser reliance on PayPal) could lend the stock upside over the medium term.

Do not agree with our forecast? Create your own price forecast for eBay by changing the base inputs (blue dots) on our interactive dashboard.

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