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eBay's Tech-Led Reimagination Starting to Bear Fruit, Raising our FVE on Strong Monetization Trends

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Narrow-moat eBay reported third-quarter earnings in line with expectations, with $2.5 billion in revenue and $0.90 in non-GAAP EPS clocking in near our forecasts of $2.5 billion and $0.89, respectively. While the firm saw a double-digit annual decline in gross merchandise volume, or GMV, (down 12% from the year ago period), this was largely contemplated in guidance, as the marketplace operator lapped a pandemic-induced mix-shift towards e-commerce purchases, stimulus payments, and restrictions in services spending. As we consider sales leverage over general, administrative, and marketing expenses (consistent with a faster rollout of payment processing than we initially anticipated), and a higher-than-expected take rate (to 12.3%-12.5% in the near to medium term, ahead of our prior 11.5% to 11.7% expectation), we plan to raise our fair value estimate of $66 per share by a high-single-digit percent. This change leaves shares trading in a range we'd consider fairly valued, particularly after a 5% correction post-print.

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Company Profile

Business Description

eBay operates one of the largest e-commerce marketplaces in the world, with $85 billion in 2020 gross merchandise volume, or GMV, rendering the firm the fifth- largest global e-commerce company. eBay generates revenue from listing fees, advertising, revenue-sharing arrangements with service providers, and managed payments, with its platform connecting more than 154 million buyers and 19 million sellers across almost 190 global markets. eBay generates roughly 56% of its GMV in international markets (versus 44% in the U.S.), with a large presence in the U.K., Germany, and Australia.

2025 Hamilton Avenue
San Jose, CA, 95125
T +1 408 376-7008
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 12,700