What They Do
eBay operates the world's largest online marketplace connecting buyers and sellers of pre-owned and unique goods. The company makes money by taking a ~14% fee on transactions (GMV of ~$80 billion annually), plus advertising revenue from sellers promoting their listings. They've evolved from a general marketplace into a focused platform emphasizing collectibles, luxury goods, automotive parts, and recommerce (resale items).
Investment Thesis
**Accelerating Growth in Strategic Categories**: Focus categories (collectibles, luxury, auto parts) now represent ~2/3 of business at $50B+ GMV, growing 10% annually and outpacing the rest of marketplace by 12 percentage points**Rising Monetization**: Take rates expanded 60bps to 14% driven by advertising growth (now ~$2B annual revenue), shipping services, and buyer protection fees**AI-Driven Efficiency Gains**: Next-generation magical listing tool achieving 95% customer satisfaction with 25% faster listing times and 50% increase in new listing creation ratesKey Risks
**International Market Weakness**: International GMV declined 1% organically in 2024, creating geographic concentration risk in U.S. market**Margin Pressure from Acquisitions**: $1.2B Depop acquisition expected to be a "low single-digit headwind" to operating income and EPS growth in 2026Growth Story
eBay is experiencing a growth renaissance with GMV accelerating throughout 2025 to 8% growth in Q4, driven by U.S. momentum (19% Q4 growth) and strategic category focus. Revenue growth of 13% in Q4 outpaced GMV due to improving take rates and advertising expansion. The company expects similar GMV growth rates to continue in 2026, with the Depop acquisition adding 1-2 percentage points of incremental growth.
Profitability Profile
eBay maintains strong profitability with 72% gross margins and 26% operating margins, generating ~$3.1B in operating income annually. The company is on a steady margin expansion path driven by operating leverage on advertising revenue growth and AI-powered cost efficiencies. Free cash flow generation remains robust, supporting both the $1.2B Depop acquisition and ongoing shareholder returns.
Competitive Position
eBay has carved out a defensible niche in recommerce and collectibles, differentiating from Amazon's new goods focus. The platform's 135 million active buyers and deep expertise in authentication/verification create network effects and trust advantages. While facing competition from specialized platforms like Poshmark and StockX in specific categories, eBay's scale and cross-category synergies provide competitive moats.
Recent Momentum
Q4 2025 results significantly exceeded expectations with 3.2% revenue beat and strong EPS outperformance, marking the fourth consecutive quarter of beats. U.S. GMV acceleration (up 6 points sequentially) and the strategic Depop acquisition signal renewed growth confidence. Management's bullish 2026 guidance suggests momentum is sustainable.
What Wall Street Thinks
Analysts appear increasingly optimistic given consistent earnings beats and improving growth trajectory, though revenue estimates show modest near-term expectations (CY26: $12.0B, CY27: $12.6B). The market is likely focused on whether U.S. growth momentum can offset international weakness and how successfully eBay can integrate acquisitions while maintaining margins.
The Bottom Line
eBay has successfully repositioned itself as a high-growth recommerce platform with accelerating GMV, expanding take rates, and AI-driven efficiency gains, trading at reasonable valuations despite consistent execution and a large, undermonetized market opportunity.
