eBay Inc. (EBAY): A Bull Case Theory

We came across a bullish thesis on eBay Inc. on Pacific Northwest Edge’s Substack by David. In this article, we will summarize the bull’s thesis on EBAY. eBay Inc.'s share was trading at $76.86 as of June 23^rd. EBAY’s trailing and forward P/E ratios were 18.48 and 14.41, respectively, according to Yahoo Finance.

eBay, a longstanding name in online commerce, remains a unique platform that blends consumer-to-consumer sales with broad e-commerce reach. Though no longer in its hypergrowth phase, eBay still offers compelling value through a network effect-based business model, connecting millions of buyers and sellers in a self-reinforcing marketplace. The platform’s auction model and authentication services for luxury goods add unique differentiators in a crowded online retail space.

While revenue growth has been modest, it remains positive, shifting the focus of the investment thesis toward capital returns. eBay has consistently prioritized share buybacks, even exceeding free cash flow in doing so, thanks to monetizing bond portfolios and equity investments, though this pace may not be sustainable long-term.

A potential 48% drop in buybacks and dividends may sound alarming, but even then, eBay could still offer attractive returns relative to its $33 billion market cap and $2.5 billion in recent five-quarter free cash flow. With a P/E of 17 and manageable debt, the stock presents a reasonable valuation, but lacks catalysts without some revenue acceleration. The platform’s strongest strategic advantage lies in its network economies, where its scale of users makes it increasingly valuable, while other competitive moats like scale economies, switching costs, or proprietary technology remain absent or weak.

Ultimately, eBay’s disciplined financials and shareholder-friendly policies make it a stock worth watching, but not necessarily buying, unless earnings growth materializes or valuation becomes more attractive. For now, it remains a mature, cash-generative business with respectable performance, albeit underwhelming relative to the broader tech sector’s recent surge.

Previously, we covered a bearish thesis on eBay Inc. by Kostadin Ristovski, ACCA, in November 2024, which highlighted eBay’s limited growth potential, flat GMV trends, and concerns around capital allocation efficiency. The company’s stock price has appreciated by approximately 25% since our coverage. This is because the thesis didn’t play out as expected. David shares a contrarian view but emphasizes eBay’s network effects and strong shareholder returns.

EBay Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held EBAY at the end of the first quarter, which was 45 in the previous quarter. While we acknowledge the risk and potential of EBAY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.