Analyst Note| David Swartz |
As had been reported in the media over the past week, eBay announced the sale of 80% of its South Korean operationsto Emart, the largest physical retailer in the country, for KRW 3.44 trillion (about $3.0 billion). This deal (in the works for more than a year) does not affect our narrow moat rating for eBay, which is based on the network effect of its operations in the United States (40% of 2020 revenue). Moreover, the sale price is in the range of our estimates in prior reports and has no immediate impact on our per-share fair value estimate of $58. Still, eBay will retain 20% ownership, allowing it to participate in any upside in the future if Emart grows the business. In this vein, Emart intends to use its stores for shipments while investing more than KRW 1 trillion ($880 million) over the next four years in online fulfillment centers, which should make it more competitive with e-commerce rival Coupang.