eBay

EBay's second-quarter results featured a 15% increase in revenue to $3.1 billion and adjusted EPS of $1.60, up 17%. Organic gross merchandise volume grew 14% to $22.4 billion, while adjusted operating margin jumped 20 basis points to 28.5%, reflecting operating efficiency improvements.

Why it matters: We think these results underscore the efficacy of eBay's strategic pivot toward enthusiast buyers. Focus categories, consumer-to-consumer, and recommerce exceeded 70% of GMV, and each grew more than 20%. Focus categories' GMV rose 26%, eclipsing 40% of total GMV for the first time. In our view, investments in authenticity guarantees and AI-powered listing tools are successfully reducing friction and building trust in high-value categories like collectibles, motors, and fashion. Meanwhile, eBay closed its $1.4 billion acquisition of the fashion resale platform Depop late in the quarter, adding roughly 9 million active, younger buyers to its ecosystem. We view this transaction as complementary in that it expands eBay's addressable market in consumer-to-consumer.

The bottom line: We plan to raise our $67 fair value estimate for narrow-moat eBay by a mid-single-digit percentage on a stronger near-term GMV outlook. We forecast the firm will leverage high-margin advertising growth to push its operating margin to 24.5% by 2029, up from 20.5% in 2025. We view shares as expensive at more than 60% above our fair value estimate. In our view, the market underestimates the level of marketing spending required to drive GMV growth effectively on not only its core strategic priorities, but also growth vectors such as live commerce.

Between the lines: Resale fashion platform Vinted's expansion into the US adds competitive pressure to Depop. We think eBay's broader buyer base and trust capabilities offer advantages, but defending consumer-to-consumer fashion share could require persistent shipping and marketing subsidies.

We raise our fair value estimate for eBay to $71 per share from $67, primarily reflecting a stronger near-term gross merchandise volume outlook following better-than-expected second-quarter results. Recent momentum across focus categories, consumer-to-consumer, and recommerce leads us to modestly raise our near-term growth expectations, though we make no material change to our longer-term marketplace or profitability assumptions.

Our top-line assumptions are underpinned by 4.8% annual growth in gross merchandise volume, representing a reversal from the 1.5% decline on average since 2019. We expect this GMV expansion to be driven by a 3.4% average annual increase in average order value per user, normalizing from 5.1% AOV growth since 2019. Given its standing as a mature marketplace, we forecast this AOV expansion will be paired with modest, low-single-digit active buyer growth. This reflects encouraging stabilization, considering the firm’s active buyer base had contracted by an average of 3.7% annually since 2019. We believe eBay’s renewed strategy of targeting focus categories and enthusiasts, paired with the introduction of authenticity guarantees, will allow it to capture additional wallet share. We also assume modest monetization improvement, with the core marketplace take rate rising 20 basis points over 2025 to 11.6% by the end of our forecast. We posit this growth will be complemented by an 8.6% CAGR in advertising revenue, fueled by deeper seller adoption of first-party advertising as merchants increasingly rely on paid placement to gain visibility in a highly competitive search feed.

We model operating margin expanding from 20.5% in 2025 to 23.9% by the end of the decade. We expect cost of goods sold to fall 90 basis points to 27.6% as advertising revenue is more profitable and grows as a share of GMV to 3.5% (from 2.5% in 2025). We forecast product development expenses declining 170 basis points to 13.1% of sales as eBay laps major managed-payments and ad-tech buildouts, gains from efficiency in AI tools, and better leverages prior platform investments across a larger revenue base. We model 160 basis points of selling, general, and administrative expense leverage (to 12.8%) stemming from reductions in corporate overhead, the fruits of efforts to streamline the business around focus categories, and Depop integration synergies. These gains are partially offset by our expectation that sales and marketing expenses rise 80 basis points to 22.4% of sales, as eBay invests to drive traffic, loyalty, and category depth. We view the recent Depop acquisition as supporting growth in C2C fashion and a younger demographic of users, but we don’t believe the deal will become accretive to operating income until 2028.

We assign eBay a narrow Morningstar Economic Moat Rating, underpinned by the network effects of its large two-sided e-commerce marketplace. As a third-party platform, eBay connects a global base of buyers and sellers. While e-commerce is dominated by wide-moat retailers Amazon and Walmart, eBay has carved out a defensible, scaled niche in consumer-to-consumer sales, recommerce, and enthusiast categories. EBay has consistently generated excess returns, with a five-year average return on invested capital of 21%, well above our 9% weighted average cost of capital estimate. As the firm optimizes its take rate (its cut of gross merchandise volume through marketplace and advertising) and focuses on enthusiast buyers, we forecast ROIC will average 21% over the next decade. However, we do not assign a wide moat due to the lack of switching costs for both buyers and sellers, as evidenced by widespread seller multihoming and the absence of a sticky subscription ecosystem akin to Amazon Prime.

As the second-largest US e-commerce marketplace by third-party gross merchandise volume ($39 billion), eBay benefits from a flywheel in which 135 million active buyers attract 18 million sellers (dwarfing Amazon’s 2 million and Walmart’s 200,000), whose inventory depth (helps retain buyers. This effect is most evident in eBay’s focus categories such as motor parts and accessories, electronics, and collectibles, each generating over $10 billion in annual GMV. Crucially, in 2022, eBay shifted from acquiring low-frequency shoppers to cultivating enthusiast buyers. Though only composed of 16 million users, the core cohort drives about 70% of GMV. These enthusiasts spend nearly $3,300 annually, roughly 9 times more than nonenthusiasts, with 1 in 4 also selling on the platform. By catering to this highly engaged subset, average revenue per active buyer nearly doubled from $45 in 2019 to $83 in 2025, driving an average order value of $590.

To defend its network effect and drive GMV growth, eBay has invested in reducing seller friction, helping increase live listings to 2.5 billion in 2025 from 1.6 billion in 2021. Historically, selling on eBay was operationally complex due to disjointed inventory, shipping, and cash flow management. Now, the unified Seller Hub allows merchants to track listings, measure advertising return on investment, and manage working capital loans via eBay Seller Capital. Furthermore, the 2023 rollout of the AI-powered “magical listing” tool allows sellers to upload a photo and instantly generate search engine-optimized product descriptions, removing a key bottleneck to C2C listings. EBay has also expanded its domestic sellers’ total addressable market through its international shipping program. By handling customs, tariffs, and returns after a package reaches a domestic hub, eBay reduces cross-border friction, unlocking global liquidity for localized inventory.

These seller-focused enhancements have strengthened eBay’s demand-side liquidity, giving sellers the confidence to list an unparalleled degree of niche items as its 135 million active buyers are difficult and costly to replicate elsewhere. This captive audience has granted eBay the pricing power to steadily push its total take rate higher. We estimate eBay’s core marketplace take rate was 11.4% in 2025 (nearly 14% when including advertising income), compared with just 10.5% in 2015. Furthermore, the integration of managed payments in late 2021 contributed roughly 200 basis points to the take rate, helping drive this expansion. By bringing payment processing in-house, eBay captures the underlying transaction economics while reducing checkout and backend accounting friction, respectively, for buyers and sellers.

On the demand side, eBay’s focus on the $500 billion recommerce market (over 40% of GMV) differentiates it from traditional retailers. The recent acquisition of Depop adds roughly 7 million younger buyers, creating opportunities for cross-platform listing and expanded reach. Historically, eBay’s marketplace felt disorganized, creating friction in discovery and trust. Management has addressed this through search improvements, better cataloging, and greater emphasis on authenticity and condition assurance in higher-value categories. We think authenticity guarantees are particularly important for enthusiast purchases, where trust drives conversion. In our view, these trust layers enhance marketplace value, supporting higher prices (average order value is up 26% since 2019) and better sell-through rates. EBay now inspects over 1 million items per quarter (15 million since program inception), reinforcing the flywheel.

Ultimately, eBay’s competitive position faces limitations that preclude a wide moat. Core marketplace active buyers have been largely flat for the past three years. Pandemic-era stimulus drove a surge in low-frequency buyers, but as the economy reopened, many churned, reducing active buyers (adjusted for divestitures) from 154 million to 135 million in 2025. More importantly, eBay operates in a market where multihoming is common. Buyers routinely cross-shop on Amazon, Walmart, and other specialty marketplaces; eMarketer cites that US consumers often begin shopping on Amazon, search engines, or Walmart.com, encouraging sellers to list across multiple platforms. Unlike Amazon, whose Prime ecosystem drives recurring engagement, eBay lacks a comparable subscription service that generates recurring click traffic. This lack of structural lock-in extends to the supply side. eBay’s asset-light fulfillment model lacks a proprietary, scaled logistics network, like Fulfillment by Amazon, that anchors a merchant’s inventory to the platform. As a result, sellers face low switching costs and can easily multihome based on traffic or fee structures. This is especially problematic for the roughly 60% of eBay’s GMV that isn’t recommerce, where products are more commoditized and overlap most with larger players.

Accelerated adoption of high-margin first-party advertising could expand operating margins and offset marketplace take rate pressures faster than we forecast.

Momentum in focus categories driven by enhanced trust through authenticity guarantees could spark a larger return to active buyer growth and push average order values above our estimates.

A successful integration of Depop could capture Gen Z recommerce share more rapidly than we expect, serving as an incremental growth engine to accelerate platform GMV.

Niche platforms like Vinted, Chrono24, and StockX, which pair lower seller fees and deeper category-specific tools with tighter enthusiast communities, could siphon listings away from eBay, pressuring liquidity.

Because eBay’s seller inventory is heavily discretionary merchandise, prolonged macro weakness may weigh on consumer spending and could stall transactions to a higher degree than we forecast.

With nearly half of revenue generated internationally, currency volatility, tariffs, and cross-border trade friction could constrain GMV and profitability more than we foresee.