eBay (EBAY): Evaluating Valuation After Recent Stock Gains Spark Analyst Debate

eBay (EBAY) shares advanced about 2% today as investors assessed its recent trading patterns and near-term performance. The stock has returned 9% over the past month and nearly 28% in 3 months, sparking renewed analysis around its valuation.

See our latest analysis for eBay.

eBay's momentum has really gathered steam in 2024, with a surge that’s hard to ignore. After a steady climb through the spring, the stock’s 1-year total return stands at over 61%, while its 3-year total shareholder return is a striking 165%. This is a sign that long-term holders have enjoyed substantial gains along the way. Strong recent buying suggests renewed optimism about the company’s growth potential and a shift in risk perception as investors pay closer attention to eBay’s fundamentals and valuation story.

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But with eBay’s stock price approaching analysts’ targets, the key question is whether the recent gains reflect real underlying value or if optimism has already been fully incorporated, leaving little room for a fresh buying opportunity.

Most Popular Narrative: 8.8% Overvalued

With eBay’s last close at $99.58 and the most widely followed narrative placing fair value at $91.55, the valuation sits above consensus estimates. The latest narrative weighs impressive momentum against financial and strategic headwinds, offering a clear view on where analysts believe value will materialize from here.

Expansion of mobile access and innovative app experiences, including new AI-powered listing tools, personalized communications, streamlined C2C managed shipping, and eBay Live social shopping, are driving higher seller and buyer engagement. This is likely to lift active user growth, listing volume, and ultimately top-line revenue.

Read the complete narrative.

Curious why the narrative signals a premium above fair value? The secret sauce includes fresh growth bets and bold profit expectations. Which projections are most aggressive? Only the full forecast reveals the numbers and logic that set this price.

Result: Fair Value of $91.55 (OVERVALUED)

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

However, persistent macroeconomic pressures and an overreliance on categories like collectibles could undermine eBay’s bullish outlook if growth trends falter.

Find out about the key risks to this eBay narrative.

Another View: What About SWS’s DCF Valuation?

While analyst narratives suggest eBay is trading at a slight premium, the SWS DCF model comes to a very different conclusion. According to this method, eBay's current price of $99.58 is actually 30.6% below its estimated fair value of $143.45. This implies meaningful undervaluation. Can a discounted cash flow model see value others might be missing, or does it overlook key risks embedded in future growth estimates?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own eBay Narrative

If you see things differently or want to shape the story yourself, you can dig into the numbers and build a fresh take in just a few minutes, your way. Do it your way

A great starting point for your eBay research is our analysis highlighting 2 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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