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We Raise eBay’s FVE As We Envision a Simpler, Higher-Margin, Reimagined Business

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Narrow-moat eBay's business looks a lot different than it did two years ago following the divestitures of Stubhub, eBay Classifieds, and the pending sale of the firm's South Korean marketplace business. All told, we anticipate that eBay will recognize approximately $14.8 billion in after-tax gains on sale during 2021, which led the firm to increase its 2021 share repurchase facility to $5 billion, from $2 billion previously. We view this as a prudent use of capital, with no apparent need for incremental internal investments or acquisitions, and now forecast $9.3 billion in share repurchases through 2023. After making adjustments for time value of money and sales leverage over fixed costs like depreciation and amortization, sales and marketing expenditures, and administrative overhead, we're raising our fair value estimate to $66 from $58 prior, leaving shares fully valued. Further, contemplating relative stability in the marketplace business, we're lowering our uncertainty rating to medium from high.

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Company Profile

Business Description

eBay operates one of the largest e-commerce marketplaces in the world, with $85 billion in 2020 gross merchandise volume, or GMV, rendering the firm the fifth- largest global e-commerce company. eBay generates revenue from listing fees, advertising, revenue-sharing arrangements with service providers, and managed payments, with its platform connecting more than 159 million buyers and 19 million sellers across almost 190 global markets. eBay generates roughly 55% of its GMV in international markets (versus 45% in the U.S.), with a large presence in the U.K., Germany, and Australia.

2025 Hamilton Avenue
San Jose, CA, 95125
T +1 408 376-7008
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 12,700