eBay faces challenges as gross merchandise volume declines

In the United States, eBay has experienced a significant change in its financial performance over the past few years. The company's gross merchandise volume (GMV) reached a peak of $87.4 billion in 2021, but has since declined to $73.2 billion in 2023 due to a challenging macroeconomic environment. After facing difficulties, the company is beginning to show signs of recovery, reporting a 1% increase in GMV and a slight improvement in its take rate, which reached 13.9% for the nine-month period ending in September 2024. This indicates a positive trend in eBay's operational metrics, which could bode well for its future performance. The recent growth in eBay's revenue can largely be attributed to its strategic focus on specific categories such as auto parts and accessories, collectibles, refurbished goods, handbags, and luxury fashion. These categories have been successful in driving higher GMV and contributing to the improved take rate over recent quarters. The company's Q3 results revealed revenues and earnings that exceeded market expectations, suggesting that its targeted approach is producing favorable outcomes. Additionally, eBay’s acquisition of Shutl earlier in 2024 is aimed at enhancing its delivery capabilities, particularly by offering same-day delivery options. However, eBay is not without challenges, as it faces intense competition from other retail giants like Amazon, Walmart, Etsy, and Temu among others. Although eBay has delivered better annual returns than the broader S&P 500 index in recent years, with returns of 34% in 2021, -36% in 2022, and 8% in 2023, its stock performance has been inconsistent. Investors are now watching closely to see if the stock can maintain its momentum against the backdrop of ongoing uncertainty in the macroeconomic landscape, including potential rate cuts by the U.S. Federal Reserve. Looking forward, eBay's valuation is estimated to be around $60 per share, which is slightly lower than its current trading price of $64. The stock is currently trading at over 12 times its expected earnings for 2025, which raises questions about whether it is fully valued at this level. Analysts express concern that if inflation remains high and the Federal Reserve pauses rate cuts, this could negatively affect consumer sentiment and impact eBay's future performance prospects. The outcome of these conditions will likely shape eBay's stock performance over the next year.