Introduction
Founded in 1995 in San Jose, California, eBay Inc. is a global commerce leader that connects people and builds communities to create economic opportunity for all. Our technology empowers millions of buyers and sellers in more than 190 markets around the world, providing everyone the opportunity to grow and thrive. Our Marketplace platforms, including our online marketplace located at www.ebay.com and its localized counterparts, our off-platform businesses in Japan and the United States, and our suite of mobile apps, together, create one of the world’s largest and most vibrant marketplaces for discovering great value and unique selection. In 2023, eBay enabled more than $73 billion of gross merchandise volume.
Our business model and pricing are designed so our business is successful when our sellers are successful. We earn revenue primarily through fees collected on paid sales, inclusive of payment processing and first-party advertising. (from EBay’ form 10k)
Liquidity and solvency analysis
eBay reported total assets of $21.6 billion as of December 31,2023, compared with $20.8 billion as of December 31, 2022.
Total current assets were $11billion , and total current liabilities were $4.5 billion as of December 31, 2023.
The current ratio was about 2.4 times.
The liquidity is very strong,
eBay’s total liabilities were $15.2 billion as of December 31,2023.
The debt ratio was 70%.
If goodwill is removed from total assets, the debt ratio will be higher.
Goodwill was $4.27 billion in 2023, which accounted for 19.8% of total assets.
Given that eBay have a lot of cash flow, its solvency is strong.
Net cash provided by operating activities was $2.4 billion in 2023.
Profitability analysis
eBay reported net revenues of $10.1 billion, $9.8 billion and $10.4 billion in 2023, in 2022 and in 2021, respectively.
Net income was $2.76billion, $-1.27billion and $13.6 billion in 2023, in 2022 and in 2021, respectively.
Fluctuations in net profit are caused by gains and losses from equity investments.
It is more appropriated to use the account of operation income to calculate actual income.
Income from operations was $1.94 billion, $2.35 billion and $2.92 billion in 2023, in 2022 and in 2021, respectively.
The operating profit margin was 19.2%, 24% and 28% in 2023, 2022 and in 2021, respectively.
The operating profit margin is very high, but this is a downward trend.
In addition, there is a big question that eBay’s revenues have not grown in the past three years.
The stock price is very unpopular.
Now, the P/E ratio is 9.44 and eBay’s capitalization is about $25 billion.
Cash flow analysis
Net cash provided by operating activities was $2.4 billion, $2.25 billion and $2.65 billion in 2023, in 2022 and in 2021, respectively.
eBay’s free cash flow was $2 billion, $1.8 billion and $2.2 billion in 2023, in 2022 and in 2021, respectively.
We think that shareholders’ s return would not exceed the amount of free cash flow.
Summary
We predict that eBay’s return of investment is less than 10% per year.
If eBay dose not get better, he will get worse.
We are afraid that eBay’s net income will get less in the future.
The company become more unattractive in a situation of high interest rates.
We reckon that eBay is worth $15 billion.