eBay stock price went parabolic on Wednesday after the company received some good news from Meta Platforms, the biggest social media company globally. The stock surged to a high of $71.50, its highest point since November 2021, continuing a trend that started in October when it bottomed at $31. So, will the potential Meta partnership push the EBAY stock higher in the long term?
eBay products to be shown in Facebook Marketplace
The main catalyst for the eBay share price surge was an announcement by Facebook that it was conducting a “small” test in the US and some European countries. This test, in line with a European ruling, will see eBay products listed on Facebook Marketplace, a platform with millions of active customers a month.
eBay will benefit if Facebook continues with the rollout permanently, as it will expose its sellers to millions of users. Facebook will also benefit by taking a small cut of the sales made from the marketplace.
However, it is still unclear how significant the rollout will be for eBay, a company whose growth has largely stalled in the past few years. Its annual results showed that it made over $10.1 billion in 2023, slightly higher than the $9.79 billion it made in the same period a year earlier.
The most recent quarterly results showed that eBay’s business remained under pressure in the third quarter. Revenue grew by just 3% to $2.6 billion, while it gross merchandise volume ose by 2% to $18.3 billion.
This slow growth is mostly due to eBay’s substantial competition from top companies like Amazon and Walmart. This competition has made it difficult for eBay to attract more buyers and sellers than it did a few years ago.
eBay has offset its slow GMV growth by investing in other revenue-generating initiatives. For example, the company is boosting its investments in advertising, a business that brought in over $408 million in revenue in the third quarter.
It has also engaged in some financial engineering to boost its stock price. One way this is happening is through dividends and share repurchases. It repurchased shares worth $750 million in Q3 and paid $131 million in dividends. As a result, its outstanding shares have dropped from over 1 billion in 2017 to 482 million today.
Analysts see eBay’s growth slowing
Wall Street analysts are pessimistic about eBay’s growth prospects. The average revenue growth for the fourth quarter is just 0.9% to $2.58 billion, followed by $2.6 billion in the first quarter of 2025. If this is correct, then eBay’s annual revenue this year will be $10.28 billion, followed by $10.6 billion next year.
Therefore, there are concerns about whether eBay’s valuation can be justified. The firm has a forward P/E ratio of 18, which is lower than the sector median of 19. It is also lower than the S&P 500 average of 24.
These numbers mean that the company is not expensive even as its stock nears its record high. The main issue is that it lacks a clear catalyst to keep pushing it higher.
eBay stock price analysis
The weekly chart shows that the eBay share price has rebounded after forming a double-bottom pattern at $36.45 between 2022 and 2023. It has remained above the 50-week moving average, and just crossed the key resistance at $67.42, invalidating the double-top pattern.
eBay is also slowly forming a cup and handle pattern whose upper side is at $76. The Relative Strength Index (RSI) and other oscillators have continued rising. Therefore, the stock will likely continue rising as bulls target the upper side of the cup at $76. If the C&H pattern works well, then the stock will jump to $118 in the longer term.
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