A Look at eBay's Valuation Following Cautious Holiday Outlook and U.S. Trade Policy Headwinds

eBay (EBAY) shares slid following its third-quarter earnings announcement, as the company’s profit outlook for the holiday quarter missed expectations. While revenue growth held up, management pointed to headwinds from new U.S. trade policies and flat active buyer numbers.

See our latest analysis for eBay.

It has been a volatile stretch for eBay, with the share price sinking nearly 18% in the past week and about 11% over the past month, as a cautious holiday profit forecast and concerns around U.S. policy changes outweighed otherwise steady third-quarter results. Still, zooming out, the stock’s longer-term trajectory remains positive. Total shareholder returns are up 35% over one year and a remarkable 108% over three years, signaling that while momentum has stalled lately, eBay’s long-range performance is still impressive by most measures.

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With eBay trading well below analyst target prices while delivering steady long-term returns, investors are left asking if the recent drop is a bargain entry point or if markets have already accounted for future growth challenges.

Most Popular Narrative: 10.8% Undervalued

With eBay's widely followed narrative placing fair value close to $91.55 per share, the last close of $81.68 signals meaningful upside, setting expectations that recent market weakness may not reflect the core earnings picture.

Enhanced use of generative AI for listing optimization, ad targeting, search relevancy, and customer retention is reducing operating costs, boosting marketing ROI, and driving higher GMV per user. This should positively impact net margins and earnings.

Read the complete narrative.

How does this narrative justify a premium fair value? There is a bold story in the numbers, combining forward revenue growth, shifting profit margins, and an earnings multiple that breaks with past trends. Curious which assumptions tip the scales? Find out what is fueling the optimism and where the narrative diverges from market consensus.

Result: Fair Value of $91.55 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, eBay's momentum could stall if growth in collectibles fades, or if core marketplace categories struggle to maintain consistent performance.

Find out about the key risks to this eBay narrative.

Build Your Own eBay Narrative

If you see things differently, or want to dive into the data and form your own view, building a personal narrative takes just a few minutes. Do it your way

A great starting point for your eBay research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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