Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

With one of the most capital-efficient models in e-commerce, eBay's role as a global commerce facilitator should translate into excess economic profits.
With more than half of the world's Internet users coming from developing markets, eBay has a sizable global opportunity. International markets accounted for 52% of revenue in 2013.
Management's response to proposals to separate PayPal from eBay may raise awareness of how the combined platform enhances its network effect and increase emphasis on shareholder returns, evidenced by a $5 billion increase in its share-repurchase program. Read more 

Bears Say

EBay faces competition from Amazon and Google, which offer competing marketplaces, online payment services, comparison shopping sites, and ad search engines.
Even though eBay has diversified its business model, the stock remains sensitive to changes in revenue growth expectations, particularly third-party Marketplace volume trends.
Equity markets will not reward eBay unless it puts its cash stockpile ($13 billion of cash and investments as of December) to productive use, including marketplace platform enhancements, new payment technologies, and share repurchases. Read more 

Management

After leading the Marketplaces business for three years, John Donahoe took over as CEO in 2008. Before joining eBay, Donahoe was CEO of Bain & Company and at one point had worked for former CEO Meg Whitman. Overall, we believe eBay's corporate governance   Read more 

Profile

EBay provides an online trading platform in more than 40 markets of various sizes across several product categories. With $83 billion in global gross merchandise volume   Read more 

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