Analyst Note| David Swartz |
The ongoing acceleration in e-commerce during the pandemic allowed narrow-moat eBay to outperform our expectations in the final quarter of 2020. Powered by a 7% increase in active buyers and an 18% jump in gross merchandise value, net transaction revenue (91% of total) growth of 31% was well above our 23% estimate. Adding in slight outperformance in marketing revenue (9% of total), organic currency-neutral revenue growth of 28% in the quarter came in about 800 basis points above our expectation. Moreover, eBay expects this momentum to continue into the first quarter of 2021, with organic currency-neutral revenue growth of 35%-37% on a low-20% increase in gross merchandise value. However, the comparisons will get more difficult when eBay laps the pandemic-related e-commerce surge that began in the spring of 2020. We expect to raise our per share fair value estimate of $55 on eBay by a mid-single-digit percentage, but view its shares, up about 10% in post-market trading, as fully valued.