October 31, 2017

EBAY – Market expectations are for declining Uniform ROA, but management’s optimism about their new customer experiences and accelerating growth implies this may be unwarranted


  • eBay Inc. (EBAY:USA) is currently trading near historical averages relative to UAFRS-based (Uniform) Earnings, with a 17.8x Uniform P/E. At these levels, the market is pricing in bearish expectations, which may be unwarranted given management’s optimism about their new customer experiences and accelerating growth
  • Specifically, management generated an excitement marker when talking about the improved retention rates they are seeing as they roll their new experiences into the eBay ecosystem. Additionally, they are confident about the sustainability of accelerating growth in marketplace buyers, as well as in their auto parts and fashion categories. Should the firm succeed in just sustaining Uniform Margins at current levels, as management sentiment suggests, equity upside would be warranted

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