EBay falls after Morgan Stanley warns resale upstarts will nab market share
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Morgan Stanley started off coverage on eBay (NASDAQ:EBAY) with an Underweight rating.
Analyst Lauren Schenk and team think EBAY could lose market share as customers gravitate towards the +25 venture capitalist funded resale upstarts that are competing with it.
"We believe EBAY's focus category strategy will push it increasingly towards less scalable investments as it has to verticalize the platform in order to compete with the new entrants. As a result, we see adj. operating margin falling over the next few years to ~26%."
It was noted that eBay (EBAY) will end the year effectively in-line with its pre-COVID gross merchandise value run rate, calling into question to MS how impactful the focus category strategy from the e-commerce retailer has actually been.
The firm assigned a price target of $36 to EBAY, comprised of ~$30 per share in core EBAY value and ~$6 per share from large investments like Adevinta, KakaoBank, Adyen, and Gmarket. The PT sits below the 52-week low for eBay of $40.54.
Shares of EBAY fell 1.46% in early trading on Thursday.