eBay Inc. (EBAY) stock surged on Wednesday, January 10, 2025, following an announcement by Meta Platforms Inc. (META) that it would test integrating eBay listings on Facebook Marketplace. The news sent eBay shares soaring to a high of $71.50, their highest point since November 2021, and continuing a trend that started in October when the stock bottomed at $31. So, will this potential Meta partnership push the EBAY stock higher in the long term?

Meta is facing increased regulatory scrutiny in Europe, which has led to concerns about the exclusivity of Facebook Marketplace. In response, the social media giant is testing eBay listings directly on its platform, as reported by Bloomberg. This move may satisfy regulators and represents a significant potential for eBay. By allowing eBay products to be listed on Facebook Marketplace, Meta is exposing its sellers to millions of users, potentially driving more traffic and sales for eBay. However, it is still unclear how significant the rollout will be for eBay, as the test is only being conducted in the US and some European countries.



eBay has been facing stagnant growth in recent years, with its annual results showing only slight increases in revenue. In 2023, eBay made over $10.1 billion in revenue, slightly higher than the $9.79 billion it made in the same period a year earlier. The most recent quarterly results showed that eBay's business remained under pressure, with revenue growing by just 3% to $2.6 billion and gross merchandise volume (GMV) falling by 2% to $18.3 billion.

This slow growth is largely due to eBay's substantial competition from top companies like Amazon and Walmart. However, eBay has offset its slow GMV growth by investing in other revenue-generating initiatives, such as boosting its advertising business. In the third quarter of 2024, eBay's advertising business brought in over $408 million in revenue. Additionally, eBay has been actively repurchasing shares and increasing dividends, which has helped to boost its stock price.

Wall Street analysts are pessimistic about eBay's growth prospects, with the average revenue growth for the fourth quarter expected to be just 0.9% to $2.58 billion, followed by $2.6 billion in the first quarter of 2025. If this is correct, then eBay's annual revenue this year will be $10.28 billion, followed by $10.6 billion next year. This has raised concerns about whether eBay's valuation can be justified, given its forward P/E ratio of 18, which is lower than the sector median of 19 and the S&P 500 average of 24.

In conclusion, the potential Meta partnership could push the EBAY stock higher in the long term, as it exposes eBay sellers to millions of Facebook Marketplace users. However, the success of this integration will depend on how significant the rollout becomes and whether it drives meaningful growth for eBay. Investors should closely monitor the progress of this partnership and eBay's overall performance to make informed decisions about the stock's long-term prospects.