Valens Research Weekly Equity Idea Highlight for March 20, 2019 – eBay Inc.
March 21, 2019
EBAY is a winning investment with robust returns, strong economic moats, and management that is properly aligned and showing more confidence that imply low market expectations are too pessimistic
Market expectations for EBAY are excessively pessimistic. Markets expect UAFRS-based (Uniform) ROA (ROA’) to decline significantly going forward, even though ROA’ has been remarkably stable since the company spun off the PayPal business in 2015. However, EBAY has robust economic moats in both their core marketplace and their StubHub segments, where they are market leaders with strong competitive advantages, which give reasons for them to sustain their 3x or higher returns going forward.
