Online Recommerce And AI Will Shape Sustainable Market Opportunities

Key Takeaways

• Enhanced mobile experiences and AI-driven tools are increasing engagement, user growth, and listings, boosting top-line revenue and market relevance.
  
• Expansion of high-value categories, value-added services, and first-party advertising is driving higher margins, take rates, and diversified high-margin revenue streams.
  
• Heavy dependence on narrow growth categories, macroeconomic headwinds, and rising competition threaten eBay's revenue consistency, margin stability, and long-term relevance.

Catalysts

Operates marketplace platforms that connect buyers and sellers in the United States, the United Kingdom, China, Germany, and internationally.

• Broadening global adoption of online commerce-especially in recommerce/second-hand goods-positions eBay to accelerate GMV growth and revenue as more consumers seek value and sustainability, supported by ongoing success in high-engagement categories like collectibles, trading cards, luxury fashion, and parts & accessories.
  
• 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, which is likely to lift active user growth, listing volume, and ultimately top-line revenue.
  
• Investment in verticalization for high-value categories, along with scaling value-added services such as authentication, bulk selling, and payments partnerships like Klarna, is increasing take rates and average selling prices, supporting revenue expansion and margin improvement.
  
• 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, which should positively impact net margins and earnings.
  
• Ongoing penetration of first-party advertising and financial services businesses creates additional high-margin revenue streams that are growing faster than GMV, strengthening take rate and operating leverage, and supporting sustained earnings per share and free cash flow growth.

eBay Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming eBay's revenue will grow by 5.4% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 20.9% today to 18.7% in 3 years time.
• Analysts expect earnings to reach $2.3 billion (and earnings per share of $5.33) by about September 2028, up from $2.2 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $2.0 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, up from 19.3x today. This future PE is lower than the current PE for the US Multiline Retail industry at 21.6x.
• Analysts expect the number of shares outstanding to decline by 4.59% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.75%, as per the Simply Wall St company report.

eBay Future Earnings Per Share Growth

Risks

• eBay's trading cards and collectibles categories are showing exceptional, but potentially unsustainable, growth that is highly dependent on product release cycles and market "hype"; this creates volatility in GMV and revenue, especially as management warns that growth in these areas may moderate and face tough year-over-year comparisons, impacting revenue consistency and margin stability.
  
• The core business outside focus categories is only growing low-single digits or flat, suggesting that GMV and revenue reacceleration depends heavily on continued outperformance of a narrow set of verticals; if these focus categories underperform or competitive pressures increase, overall revenue growth could slow, limiting long-term earnings potential.
  
• There is ongoing macroeconomic pressure, particularly in key international markets like the UK and Germany, with low consumer confidence and flat or negative GDP growth; this sustained weak backdrop could limit eBay's ability to grow GMV, especially internationally, putting downward pressure on revenue growth and earnings.
  
• Despite substantial investments in AI-driven features, managed shipping, and vertical initiatives, eBay's reliance on third-party logistics and fragmented seller fulfillment systems persists; failure to sufficiently improve buyer delivery experience versus logistics-integrated competitors could erode repeat sales, compress net margins due to necessary shipping incentives, and weaken long-term user retention.
  
• eBay faces intensifying competition for younger demographics, who increasingly prefer niche, visually rich, and mobile/social-first commerce platforms-potentially leading to a long-run decline in brand relevance, active buyer growth stagnation, and erosion of GMV and future earnings as user preferences shift away from eBay's marketplace model.

Valuation

• The analysts have a consensus price target of $88.074 for eBay based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $102.0, and the most bearish reporting a price target of just $60.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.3 billion, earnings will come to $2.3 billion, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 8.8%.
• Given the current share price of $92.46, the analyst price target of $88.07 is 5.0% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.