How Should We Interpret eBay Stock?

The YTD increase in the stock price of eBay (NASDAQ NDAQ: EBAY) is about 12% as opposed to the 17% increase in the S&P500 index. However, the stock is now trading 5% below Trefis' estimate of $49, which represents the fair value of eBay, at a price of $47. The business outperformed forecasts in the first quarter of 2023. The growth of payment services and promoted listing items led to a little increase in net revenues to $2.5 billion and a higher take rate (net revenues divided by gross merchandise value). However, a decline in website traffic partially offset the top line, which is also visible from a 5% year-over-year decline in gross merchandise value. In terms of costs, operational costs as a percentage of revenues.

In FY2022, the revenues decreased by 6% year over year to $9.8 billion. It was mainly because internet traffic was smaller than it had been during Covid-19. Additionally, the operating margin shrank during the year as a result of rising costs. A net loss of -$1.27 billion resulted from this and an increase in the loss on equity investments from -$2.4 billion to -$3.8 billion.

We anticipate that the similar pattern will hold in Q2 and that the revenues will likely increase year over year. Notably, the consensus forecasts are $2.5 billion in sales and $0.99 in profit for the second quarter of 2023. In FY2023, eBay’s total revenues are predicted to reach $10.04 billion. Additionally, the company’s earnings per share will probably rise from $17.55 to.