Query: In case you personal eBay stock (NASDAQ: EBAY), how would you react if its worth plummeted by 75% or extra within the subsequent few months? Whereas this will appear excessive, historic precedent reveals such dramatic drops are attainable.
Let’s study the present context: 12 months-to-date, eBay has outperformed the S&P 500, with a 9% acquire in comparison with the S&P 500’s 4% decline. This outperformance is partly attributed to elevated investor optimism following Meta’s announcement that sure eBay listings would seem on Fb Market, doubtlessly bolstering eBay’s aggressive place.
Nonetheless, broader market issues a couple of potential U.S. recession, fueled by components like tariffs, are driving a common sell-off. This market volatility raises issues about eBay’s future efficiency.
eBay’s inventory has demonstrated important vulnerability throughout financial downturns. In 2022, it skilled a forty five% decline inside a couple of quarters. In the course of the 2008 recession, the drop reached a staggering 75%. At present, eBay is buying and selling at $68, close to its 52-week excessive of $71. Given its historic volatility, a extreme market downturn might doubtlessly push the inventory worth under $20. Absolutely, particular person shares are typically extra unstable than a diversified portfolio – so in case you search progress with much less volatility than a single inventory, contemplate the High-Quality portfolio, which has outperformed the S&P 500 and delivered returns exceeding 91% since its inception.
Why Is It Related Now?
Whereas eBay demonstrates promising potential amid its listings to be seen on Fb, traders ought to fastidiously contemplate broader financial dangers of their analysis. As a web based retail platform, eBay faces vulnerability to falling client spending. The truth is, just lately launched information for retail gross sales confirmed a slight 0.2% improve for the month, a restoration from the earlier month’s revised 1.2% decline. Nonetheless, this fell wanting the anticipated 0.6% progress. Moreover, the buyer confidence has worsened in to an almost 2-1/2-year low in March.
Though inflation issues have moderated, they continue to be a major consideration. President Trump’s assertive insurance policies relating to tariffs and immigration have renewed apprehensions about potential inflationary pressures. This uncertainty, coupled with the U.S. financial system’s susceptibility to contraction, heightens recession potentialities.
The worldwide geopolitical surroundings has turn into more and more unstable, characterised by the persistent Ukraine-Russia battle, heightening commerce tensions, and deteriorating relationships with conventional allies together with Canada, Mexico, and European nations. After a interval of relative calm following a January ceasefire, Israel has resumed its army marketing campaign in Gaza, with lethal strikes occurring on March 18th. These exterior components introduce substantial extra dangers to the market panorama. See our analysis here on the macro picture. Given these complicated dynamics, traders can be prudent to take care of vigilant monitoring of macroeconomic indicators when evaluating positions in eBay or related investments.
How Resilient Is EBAY Inventory Throughout A Downturn?
EBAY inventory has seen an impression that was barely worse than the benchmark S&P 500 index throughout a few of the current downturns. Apprehensive concerning the impression of a market crash on EBAY inventory? Our dashboard How Low Can Shares Go Throughout A Market Crash captures how key shares fared throughout and after the final six market crashes.
Inflation Shock (2022)
• EBAY inventory fell 44.9% from a excessive of $66.81 on 6 January 2022 to $36.81 on 2 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 8 October 2024
• Since then, the inventory has elevated to a excessive of $70.93 on 25 February 2025 and presently trades at round $68
COVID-19 Pandemic (2020)
• EBAY inventory fell 31.6% from a excessive of $38.49 on 4 March 2020 to $26.34 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 24 April 2020
International Monetary Disaster (2008)
• EBAY inventory fell 74.7% from a excessive of $15.21 on 17 October 2007 to $3.85 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 19 April 2012
Defending Wealth
eBay’s Revenues have declined at a mean fee of 0.4% during the last three years, vs. a rise of 6.3% for S&P 500. Notably, the corporate’s working margin has additionally decreased from 28.1% in 2021 to 22.5% in 2024. However, this doesn’t appear to be mirrored within the firm’s valuation. EBAY inventory presently trades at 3.3x trailing revenues, which represents a slight premium in comparison with its three-year common P/S ratio of two.5x.
Given the possibilities of a slowdown in progress and broader financial uncertainties, ask your self this query: Do you plan to carry your EBAY inventory now, or will you panic and promote if it begins to drop to $40, $20, and even decrease ranges? Holding on to a declining inventory isn’t simple. Trefis collaborates with Empirical Asset Administration—a Boston space wealth supervisor—whose asset allocation methods yielded constructive returns throughout the 2008-09 interval when the S&P misplaced greater than 40%. Empirical has built-in the Trefis HQ Portfolio on this asset allocation framework to offer purchasers with higher returns and lowered danger in comparison with the benchmark index; providing a much less unstable expertise, as mirrored within the HQ Portfolio efficiency metrics.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Complete [2] |
| EBAY Return | 5% | 9% | 153% |
| S&P 500 Return | -5% | -4% | 153% |
| Trefis Strengthened Worth Portfolio | -6% | -8% | 552% |
[1] Returns as of three/18/2025
[2] Cumulative whole returns because the finish of 2016
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
