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eBay shares rose more than 5% on Oct. 12 after Morgan Stanley named the marketplace a top internet pick and lifted its price target to $132 from $127.
- eBay (NASDAQ: EBAY) rose about 5% to near $117.70, just under its 52-week high of $118.62.
- Morgan Stanley (MS) says live commerce drives more than 40% of eBay's gross merchandise volume growth.
- The stock has gained about 30% year to date and trades at roughly 17x forward earnings.
Lead
eBay (EBAY) climbed more than 5% in Monday's session, reaching about $117.70 at midday. The move followed Morgan Stanley's decision to name the online marketplace its top pick in the internet sector. The firm raised its price target to $132 from $127 and kept its Overweight rating. The shares ended the prior session up roughly 30% for the year, and the rise left them within about 1% of their 52-week high.What Did Morgan Stanley Say About eBay?
Morgan Stanley said eBay's recent acceleration in volume is larger and more durable than the market has recognized, and it attributed much of that to live selling. The note, written by analyst Nathan Feather, described the acceleration in gross merchandise volume (GMV, the total value of goods sold on the platform) as a surprise. It said operating profit had likely bottomed after a period of heavy investment. It also described a path to sustained double-digit earnings growth and room for the valuation multiple to expand.
The bank estimated that live commerce will add about four percentage points a year to GMV growth through 2030. That is close to the market's current expectation for eBay's total volume growth.
Why Is Live Commerce Driving eBay's Growth?
Live commerce is driving eBay's growth because it turns the marketplace into a real-time auction house for secondary and collectible goods. Morgan Stanley estimated that live selling accounts for more than 40% of eBay's GMV growth. The Western live-selling market has expanded more than fivefold over the past two years to about $27 billion. The bank projects a compound annual growth rate near 22% for the segment through 2030.
Buyers also recycle inventory. Nearly 80% of live commerce buyers resell items, which the bank likened to a trading ecosystem that feeds goods back into the marketplace.
In the second quarter, GMV on eBay Live grew roughly eightfold from a year earlier. Management said buyers who shop live spend about 70% more than comparable buyers who do not. The company has also moved to self-service onboarding for live sellers, which lowers the cost of adding new ones.
How Did eBay Shares and Peers React?
eBay shares rose about 5% while peers moved less, which points to a company-specific catalyst. Shopify (SHOP) gained about 3% to $176.27, and Etsy (ETSY) rose about 2% to $77.93. The Amplify Online Retail ETF (IBUY) added only 0.2%.
At about 17x forward and 24x trailing earnings, eBay trades at a valuation that leaves it exposed if growth slows. A counterview exists. Wells Fargo (WFC) trimmed its target to $91 from $92 and kept an Underweight rating. It cited concern that spending on live selling and rising competition could weigh on earnings growth.
Strategic Context
The upgrade follows a strong second quarter. Revenue rose 15% as reported to about $3.1 billion, and GMV rose 15% to $22.4 billion. Non-GAAP earnings per share were $1.60, with a non-GAAP operating margin of 28.5%. eBay returned $448 million to shareholders in the quarter, including $310 million in buybacks and $138 million in dividends.
For the third quarter, eBay guided to revenue of $3.07 billion to $3.12 billion and GMV of $22.0 billion to $22.4 billion. That implies FX-neutral GMV growth of 10% to 12%. Non-GAAP earnings per share are guided to $1.36 to $1.42. The outlook includes the $1.4 billion acquisition of fashion resale platform Depop, which closed on July 30. Depop broadens eBay's reach among younger shoppers and adds a second community-driven resale venue alongside its collectibles base.
The strategy narrows eBay's focus to categories where it holds structural advantages, including trading cards, collectibles, pre-owned luxury and parts. It has also sought to reduce its dependence on commodity retail, where larger rivals compete on price and delivery speed.
Outlook
The next test for eBay comes with third-quarter results, when the market will see whether live commerce keeps lifting GMV and whether margins hold as the company absorbs Depop and increases investment in live selling. The shares sit just below their 52-week high, so the stock is trading on expectations of continued volume growth. Competition from other marketplaces and from dedicated live-shopping platforms is the main variable for earnings growth into 2027.
