eBay (EBAY.US) strategic transformation recognized! Citigroup upgrades rating to "buy"

Citigroup Inc. recently upgraded eBay (EBAY.US) from "neutral" to "buy," with a target price significantly raised to $100. This adjustment reflects the successful strategic transformation of this long-established e-commerce platform. According to Citigroup's research report, eBay is reshaping its market competitiveness by focusing on high-growth categories, upgrading technology, and optimizing user experience. The outperformance of core financial data has become the direct driver for the rating upgrade. eBay's second-quarter financial report showed that its Focus Category Gross Merchandise Volume (GMV) grew by over 10% year-on-year, significantly higher than the company's overall growth rate. The collectibles category continues to lead, with GMV of trading cards achieving accelerating growth for the 10th consecutive quarter. Management also raised its guidance for the 2025 fiscal year, expecting full-year revenue growth of 4-6% and non-GAAP EPS growth of 10-12% to $5.43, which is more specific than the previous "high single-digit" growth expectations. Citigroup analysis indicates that the 7% GMV growth in the U.S. market is a major driver, with improvements in consumer demand and weaker-than-expected tariff impacts providing support to performance. Technology upgrades and platform optimization are key strategies for eBay's strategic transformation. The company is optimizing Google PLA listing titles with generative AI to improve quality scores and rankings, using proprietary Large Language Models (LLM) to detect and replace low-quality product listings, increasing acceptance rates to over 90%. In terms of user experience, the introduction of AI shopping assistants and professional agents further enhances platform interaction efficiency. These measures directly accelerate GMV growth in core categories, proving that technology investments are beginning to commercial value. The reconstruction of the valuation model highlights market confidence. Citigroup uses the discounted cash flow (DCF) method, with a weighted average cost of capital (WACC) of 8.8% and a terminal growth rate of 2.5%, to estimate eBay's valuation at $98. Adding minority shareholder equity value of around $2 per share, the target price reaches $100. Horizontal comparison shows that eBay's expected EV/EBITDA multiple of 14.0x and P/E multiple of 22.0x in 2026 are both higher than the five-year average levels, and are in the upper-middle range within the e-commerce platform industry, reflecting the market's reassessment of its growth prospects. Despite challenges in the European market, eBay's deep cultivation in the C2C (consumer-to-consumer) sector helps hedge international market risks. Citigroup believes that the company's differentiation strategy is gradually demonstrating value in specific verticals. This rating adjustment signifies market recognition of eBay's transformation effectiveness, but future attention needs to be focused on the commercial efficiency of technology investments and the sustainability of growth in core categories.