How eBay’s (EBAY) $1 Billion Debt Issuance Could Influence Its Future Growth Strategy

• Earlier this month, eBay closed a US$1 billion senior unsecured notes offering, consisting of US$600 million in 4.25% notes due 2029 and US$400 million in 5.125% notes due 2035, with Citigroup, Deutsche Bank, and Goldman Sachs as co-lead underwriters.
• This debt financing gives eBay additional flexibility to fund operations and pursue its ongoing technology investments, while customary covenants aim to protect the company’s financial position.
• We'll now explore how this sizeable debt issuance could influence eBay's investment narrative, particularly in relation to future growth catalysts and margin dynamics.

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eBay Investment Narrative Recap

To invest in eBay, I believe you need confidence that its focus on high-engagement categories and AI-driven improvements can offset the slower growth in its core marketplace, driving both user activity and margin expansion. The recent US$1 billion debt offering bolsters eBay's liquidity, supporting continued investment in technology and operations, but it does not materially alter the short-term catalyst of accelerating gross merchandise volume in key categories, nor does it alleviate eBay's biggest risk, softening growth outside of these verticals. Among recent corporate announcements, the ongoing share buyback program stands out, showing management's preference for capital returns alongside technology investment. This move is relevant as it suggests eBay is in a solid financial position to balance shareholder returns with investments required to support future growth drivers. In contrast, investors should be aware of the persistent risk that eBay’s revenue is still highly exposed to...

Read the full narrative on eBay (it's free!)

eBay's narrative projects $12.3 billion revenue and $2.3 billion earnings by 2028. This requires 5.4% yearly revenue growth and a $0.1 billion earnings increase from $2.2 billion currently.

Uncover how eBay's forecasts yield a $94.93 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Six members of the Simply Wall St Community have provided fair value estimates for eBay ranging from US$63.45 to US$116.03. While opinions vary widely, many in the market are watching whether eBay’s focus categories can continue driving growth as core segments remain sluggish.

Explore 6 other fair value estimates on eBay - why the stock might be worth as much as 38% more than the current price!

Build Your Own eBay Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your eBay research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free eBay research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate eBay's overall financial health at a glance.

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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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