Jan 9, 2025, 12:00 AM
Jan 9, 2025, 12:00 AM

Is eBay's growth sinking due to inflation and consumer fear?

Highlights
  • eBay's stock rose 10% after a partnership with Meta was announced for listing items on Facebook Marketplace.
  • The company faced challenges from high inflation and poor consumer sentiment, contributing to a decline in adjusted net income.
  • Despite recent recovery, eBay's growth remains uncertain amidst tough competition in the e-commerce space.
Story

In January 2025, eBay, a notable player in the e-commerce sector, experienced a 10% stock price jump after Meta announced a partnership allowing eBay listings on Facebook Marketplace. This collaboration is expected to bolster eBay's competitive positioning. Despite this uptick, higher inflation and muted consumer sentiment have adversely affected the company's overall revenue growth. Recent data indicates that from $9.8 billion, eBay's revenues increased to $10.3 billion, paralleling a 9% drop in their total shares due to significant share repurchases amounting to $7 billion. The expansion of focus categories like auto parts and luxury fashion has led to improvements in Gross Merchandise Volume (GMV). Nevertheless, competition from rivals like Amazon and Walmart presents ongoing challenges for growth. eBay's adjusted net income has decreased from $2.7 billion in 2022 to the current $2.4 billion, revealing the impact of persistent headwinds. Although share repurchases influenced a rise in earnings per share from $4.02 to $4.69 during that time frame, the volatility of eBay's stock remains a concern. The company has outperformed broader markets recently, but its growth trend is unpredictable compared to the steadiness of the S&P 500 index. An uncertain macroeconomic landscape raises questions about eBay's future, whether it will echo its 2022 and 2023 struggles or will lead to significant improvements in the coming 12 months. Analysts estimate an intrinsic value of $60 per share, which is about 13% lower than its current price of $69, indicating that it might be overvalued based on future earnings expectations.

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