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Narrow-Moat eBay Outperformed in Q4 As Strong Buyer Activity Continued; Shares Fully Valued

David Swartz Equity Analyst

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.

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Company Profile

Business Description

With $100 billion in marketplace gross merchandise volume, or GMV, generated in 2020, eBay's Marketplace facilitated more than 2% of the $4.3 trillion global online commerce market (based on eMarketer estimates). EBay's strategic priorities include revitalizing its Marketplace platform by emphasizing its unique product assortment and value proposition, improving the seller and buyer experience, utilizing structured data/artificial intelligence for listing searches, promoted listing advertising, and improving its mobile commerce capabilities. EBay partnered with Netherlands-based Adyen for payment intermediation beginning in 2018.

2025 Hamilton Avenue
San Jose, CA, 95125
T +1 408 376-7008
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 12,700