eBay's Strong Returns and Depop Acquisition Highlight Growth, But DeepValue Report Urges Caution on Customs Risks

What happened

A Motley Fool article praises eBay for delivering a 15.8% annualized total return over the past decade, driven by aggressive buybacks reducing shares by 62% since 2015 and a pending $12 billion acquisition of Etsy's Depop to add 56 million younger users. However, DeepValue's latest master report maintains a WAIT rating, emphasizing that eBay's stock at $91 already prices in mid-single-digit growth and high-20s margins, leaving limited upside. The report highlights significant downside risks from U.S. and EU customs changes starting in 2026, which could negatively impact the 49% of GMV from international markets and compress margins. While the Depop acquisition aligns with eBay's focus on enthusiast categories like fashion, it introduces integration challenges and a high cost that may strain cash flow without immediate offset to policy headwinds. Overall, eBay's operational strength and capital returns are overshadowed by imminent structural threats, suggesting investors wait for a better entry or clearer evidence of resilience.

Implication

The looming customs and tariff reforms in 2026 directly threaten nearly half of eBay's GMV, potentially leading to sustained declines in international volumes and margin erosion if not mitigated by focus categories. Aggressive buybacks have supported per-share returns, but any weakness in free cash flow due to GMV pressure could reduce capital returns, undermining a key equity value driver. The $12 billion Depop acquisition adds a younger user base and growth potential in enthusiast verticals, but it carries execution risks and a high price tag that may not justify immediate benefits amid policy uncertainty. Valuation at ~19x trailing EPS and ~16x EV/EBITDA offers little cushion if growth disappoints, making the risk-reward unfavorable at current levels without a pullback to $80. Therefore, maintaining a WAIT position is prudent until after 2026 guidance clarifies the impact of customs changes and acquisition synergies, or until the stock reaches a more attractive entry point.

Thesis delta

The Depop acquisition introduces a new growth lever targeting younger users, but it does not materially alter the core investment thesis centered on customs-driven GMV risks. However, if successfully integrated, it could enhance long-term growth in focus categories like fashion, partially offsetting international weakness. Investors should monitor early 2026 results for any shift in risk profile, but the WAIT stance remains unchanged until clearer evidence emerges.