Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

With more than half of the world's Internet users coming from developing markets, eBay has sizable global growth opportunities.
Although management has been quick to downplay the potential of a stand-alone eBay or PayPal as acquisition candidates, we believe there are potential consolidation partners for both (Google, Alibaba, and Square, as well as a host of smaller payment/technology firms) that could strengthen their respective network effects.
Potential capital-allocation changes (share repurchases/dividends) could also make a stand-alone eBay an attractive investment option. Read more 

Bears Say

EBay will face increased competition from Amazon, Apple, and Google, which offer competing marketplaces, online/mobile payment services, comparison shopping sites, and ad search engines.
Even though eBay has diversified its business model, the stock remains sensitive to revenue growth expectations, particularly third-party Marketplace volume trends.
Management's decision to incur a tax-related charge on $9 billion of cash held overseas (freeing up $6 billion in availability) could signal a new acquisition cycle, a strategy that brings its own integration and overpayment risk. Read more 

Management

There is no change to our Exemplary stewardship rating following plans to separate eBay and PayPal, as we believe both businesses will be led by strong management teams upon their separation. In particular, we're intrigued by the appointment of Dan   Read more 

Profile

With just under $85 billion in gross merchandise volume expected in 2014, eBay facilitates almost 8% of the $1 trillion-plus global e-commerce market. We anticipate PayPal's   Read more 

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