Over the past six months, eBay’s shares (currently trading at $87.71) have posted a disappointing 6.4% loss, well below the S&P 500’s 7.2% gain. This may have investors wondering how to approach the situation.
Is now the time to buy eBay, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is eBay Not Exciting?
Even though the stock has become cheaper, we're cautious about eBay. Here are three reasons you should be careful with EBAY and a stock we'd rather own.
1. Change in Active Buyers Points to Soft Demand
As an online marketplace, eBay generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, eBay’s active buyers, a key performance metric for the company, increased by 1.2% annually to 135 million in the latest quarter. This growth rate is one of the lowest in the consumer internet sector, largely a function of its already massive scale and saturated market. If eBay wants to reaccelerate growth, it likely needs to innovate with new products. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect eBay’s revenue to rise by 8.4%. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.
3. Shrinking EBITDA Margin
Investors frequently analyze operating income to understand a business’s core profitability. Similar to operating income, EBITDA is a common profitability metric for consumer internet companies because it removes various one-time or non-cash expenses, offering a more normalized view of profit potential.
Analyzing the trend in its profitability, eBay’s EBITDA margin decreased by 3.2 percentage points over the last few years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its EBITDA margin for the trailing 12 months was 31.4%.
Final Judgment
eBay isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 11.5× forward EV/EBITDA (or $87.71 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are superior stocks to buy right now. Let us point you toward one of our top digital advertising picks.
Stocks We Like More Than eBay
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Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
