What To Expect From eBay Stock?

-9.11%
Downside
53.74
Market
48.85
Trefis
EBAY: eBay logo
EBAY
eBay

eBay’s stock (NASDAQ: EBAY) has gained approximately 12% YTD, as compared to the 17% rise in the S&P500 index. However, at its current price of $47, the stock is trading 5% below its fair value of $49 – Trefis’ estimate for eBay’s valuationThe company surpassed the consensus estimates in the first quarter of 2023. The net revenues marginally increased to $2.5 billion, primarily because of a higher take rate (net revenues divided by gross merchandise value) driven by the expansion of payment services and promoted listing products. However, the top line was partially offset by a drop in website traffic, which is also evident from a 5% y-o-y decrease in gross merchandise value (GMV). On the cost front, the operating expenses as a % of revenues increased in the quarter, but the negative impact was more than offset by higher gains on equity investments – from -$2.3 billion to $198 million. Overall, it led to a significant jump in net income from -$1.3 billion to $567 million.

The revenues suffered a 6% y-o-y drop to $9.8 billion in FY2022. It was primarily due to lower website traffic, as compared to the Covid-19 levels. Further, the operating margin decreased in the year due to higher expense figures. This coupled with an increase in loss on equity investments from -$2.4 billion to -$3.8 billion, led to a net loss of -$1.27 billion. 

Moving forward, we expect the same trend to continue in Q2, and the revenues are likely to grow on a year-on-year basis. Notably, the consensus estimates for Q2 2023 revenues and earnings are $2.5 billion and $0.99,  respectively. Altogether, eBay’s revenues are estimated to touch $10.04 billion in FY2023. Further, the firm’s revenue per share (RPS) is likely to increase from $17.55 to $19.54 in the year. This coupled with a P/S multiple of just above 2.5x will lead to a valuation of $49.

Relevant Articles
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  2. Up 19% YTD, Where Is eBay Stock Headed?
  3. Trailing The S&P By 20% This Year, Can eBay Stock Rebound?
  4. Down 4% YTD, What Should You Expect From eBay Stock?
  5. eBay Stock Is Down 7% YTD, What’s Next?
  6. eBay Stock To Post Mixed Results In Q1

What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

 Returns Jul 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 EBAY Return 4% 12% 57%
 S&P 500 Return 1% 17% 101%
 Trefis Multi-Strategy Portfolio 4% 24% 299%

[1] Month-to-date and year-to-date as of 7/17/2023
[2] Cumulative total returns since the end of 2016

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