EBay Earnings: Quarterly Outperformance and Softer Near-Term Guide Offset; Shares Slightly Cheap

Narrow-moat eBay had a solid quarter, with 2% growth in sales and 1% growth in gross merchandise volume helping the firm edge our quarterly estimates. While weaker trends in the second quarter suggest slightly softer prospects in the quarter to come, updated full-year guidance—60-100 basis points of adjusted operating margin expansion (in line) and 9%-11% growth in adjusted earnings per share (raised 1 percentage point)—aligns closely with our prior estimates. While we plan to lower our 2025 top-line growth forecast to 3% from 6%, consistent with our lower US e-commerce growth estimates in that year (our prognosis now has online commerce growth falling below 7% as consumers rebuild savings), that impact is offset by the time value of money. As such, we don't expect meaningful change to our $54 per share fair value estimate.