EBAY – Market expectations are for declining Uniform ROA, but management’s confidence about growth and their gross margins implies this may be unwarranted

• eBay Inc. (EBAY:USA) is currently trading near historical averages relative to UAFRS-based (Uniform) Earnings, with an 18.3x Uniform P/E. At these levels, the market is pricing in bearish expectations, which may be unwarranted given management’s confidence about growth, gross margins, and their initiatives
• Specifically, management is confident that the decline in their gross margin during the quarter was driven by the unusual impact of the Ticketbis acquisition. Additionally, they are confident about the sustainability of active buyer growth, particularly in the U.S., and the sustainability of Marketplace GMV growth. Should the firm succeed in just sustaining Uniform ROA at current levels, as management sentiment suggests, equity upside would be warranted