Key points
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eBay stock was one of the top gainers on Wednesday.
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The catalyst is a partnership with Meta to sell eBay items on Facebook Marketplace.
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eBay stock received several price target upgrades on the news.
The ecommerce platform will be allowed to sell on Facebook Marketplace.
eBay (NASDAQ: EBAY) stock took off on Wednesday after the online retail platform got a boost from an arrangement with Meta Platforms (NASDAQ: META) and its Facebook social media site.
Meta announced Tuesday that it will allow eBay to list some items on its Facebook Marketplace ecommerce platform.
The move sent eBay stock up some 13% on Wednesday to over $71 per share – its highest level since October of 2021. By late afternoon the stock price had settled at around $69 per share, up 9% on the day.
“Thrilled” with Facebook deal
The partnership between Meta and eBay was precipitated by a decision in November by the European Commission, which said Facebook Marketplace had hindered competition. Meta was fined 797 million euros for antitrust violations for tying Facebook Marketplace to the Facebook social network and imposing “unfair trading conditions” on competitors.
Meta appealed the ruling initially, saying it “ignores the realities of the thriving European market for online classified listing services and shields large incumbent companies from a new entrant, Facebook Marketplace, that meets consumer demand in innovative and convenient new ways.”
But on Tuesday, January 8, Meta released a statement saying it was working to address the points raised by the European Commission.
Part of Meta’s solution is to allow buyers in Germany, France, and the US to browse listings from eBay directly on Facebook Marketplace while completing their transaction on eBay.
“This could benefit people using both platforms,” Meta officials said in a statement. “eBay sellers will gain exposure to Facebook’s audience while people using Marketplace will be able to discover a broader array of listings from the eBay community.”
In a statement to its sellers, eBay officials said it was “thrilled” about the partnership.
“Simply keep listing on eBay as usual to enjoy the benefits of broader visibility and the chance to reach a new audience of buyers through Facebook Marketplace,” eBay officials said in a note to its sellers. “The entire process, from product inquiries to payments, will continue to be securely handled through eBay. That means your transactions, order details, and seller protections will all remain unchanged.”
Company officials said the eBay listings on Facebook Marketplace will be from a variety of categories. Further, the listings will be based on factors including current shopping trends and listing quality.
Partnership will extend reach of eBay sellers
eBay stock got a slew of analyst upgrades after the news, including one from Citigroup. Citi analyst Ygal Arounian boosted the price target from $68 to $75 on the news, saying it will significantly extend the reach of eBay sellers, reported Street Insider.
Baird also boosted its price target for eBay, calling the Facebook partnership a “clear positive,” reported the Fly.
eBay stock has a median price target of $64, which is below its current level, but I would expect to see adjustments based on this Facebook news.
The stock has a P/E ratio of 15 and a forward P/E of 12, which is reasonable considering it has returned 60% over the past year. This Facebook catalyst, along with its reasonable valuation, could mean it has more room to run. Tune in for eBay’s Q4 earnings report and 2025 outlook when they are released February 19.
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