eBay's Long-Term Prospects Intact, but Volume Sales Slowdown Drives Meaningful Margin Pressure

After divesting a number of noncore segments, eBay's marketplace looks similar to the vibrant platform of the early 2000s, with the firm leaning into its core competency of price discovery for non-new, in-season wares. The strategic pivot strikes us as a competitive necessity, with unsuccessful forays into logistics and first-party inventory and auxiliary services seeing the bulk of business-to-consumer, or B2C, sales migrate toward larger peers with sprawling store footprints, scaled fulfillment networks, or extensive buyer and seller features. Nonetheless, the core business should have plenty of room to run, considering management's estimated $500 billion total addressable market for non-new, seasoned goods, which comprise 90% of platform gross merchandise volume, or GMV. We expect further benefit from swelling interest in resale markets and a broader rollout of the firm's focused category approach—with the operator targeting 50% of gross merchandise volume, or GMV, in those categories by 2025. The focus categories, including luxury handbags and watches, jewelry, collectibles, high-value sneakers, and now auto parts and accessories and streetwear, continue to outgrow the legacy marketplace by a substantial clip, driving a modest but discernable inflection point in U.S. GMV growth, and stymieing what would otherwise be a protracted but inevitable decline.