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 valuation. The 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.
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.
|S&P 500 Return||1%||17%||101%|
|Trefis Multi-Strategy Portfolio||4%||24%||299%|
 Month-to-date and year-to-date as of 7/17/2023
 Cumulative total returns since the end of 2016