Cautious Hold Rating on eBay Amid Modest GMV Growth and Long-term Uncertainties

Analyst Nikhil Devnani of Bernstein maintained a Hold rating on eBay, boosting the price target to $85.00.

Nikhil Devnani has given his Hold rating due to a combination of factors influencing eBay’s performance. The company’s recent quarter showed a modest 4% growth in GMV, which, while not as impressive as the double-digit growth reported by peers like Microsoft and Meta, indicates a positive shift in eBay’s US GMV growth from approximately 2% to 7%. This suggests that eBay’s longer-term growth algorithm might be feasible, but concerns remain about the sustainability of this growth given potential risks such as macroeconomic factors and the significant impact from categories like collectibles.
Despite the positive surprise in GMV growth and a promising outlook for further growth, the episodic nature of certain categories, such as collectibles, raises questions about their long-term contribution. Additionally, while there is potential for contributions from platforms like Facebook Marketplace and Caramel, these are not yet significant. Therefore, while there is a path to improved EPS growth, the current investment phase and the need for sustained GMV growth lead to a cautious Hold rating.

In another report released today, TD Cowen also maintained a Hold rating on the stock with a $80.00 price target.