EBay: Increasing Our Valuation to Better Capture Impact of Adevinta Stake

We're increasing our fair value estimate for narrow-moat eBay to $54 from $51 as we better incorporate the impact of the planned sale of its stake in Norwegian Classifieds business Adevinta to a private equity consortium led by Blackstone and Permira. More concretely, we've added an enterprise value adjustment for the roughly 20% stake that eBay will continue to hold in the private company, assuming the deal should close in the second quarter of 2024. We estimate that the value of that stake is now roughly $1.3 billion, or $2.50 per share, and is net of taxes and a 25% discount for lack of liquidity, or DLOL. We'd previously only included those shares which would be monetized at deal closure in our fair value estimate. Still, we now believe that our prior view failed to capture the economic value of that deal to eBay fully. Shares trade in a range we'd consider fairly priced.