Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

With a capital-efficient model, we believe eBay's role as a global commerce facilitator will translate into excess economic profits.
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 and Square, as well as a host of smaller payment/technology firms) that could strengthen their respective network effects. 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 $76 billion in gross merchandise volume in 2013, eBay facilitated almost 8% of the $1 trillion-plus global e-commerce market. PayPal's net total payment volume was   Read more 

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