<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> eBay's estimated fair value is US$116 based on 2 Stage Free Cash Flow to Equity </li> <li> eBay's US$87.74 share price signals that it might be 24% undervalued </li> <li>  The US$93.97 analyst price target for EBAY is 19% less than our estimate of fair value </li> </ul><p>Does the December share price for eBay Inc. (NASDAQ:EBAY) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by taking the expected future cash flows and discounting them to their present value.  This will be done using the Discounted Cash Flow (DCF) model.  Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.</p><p> Remember though, that there are many ways to estimate a company's value, and a DCF is just one method.  Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. </p><p>We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.</p><h2> Is eBay Fairly Valued? </h2> <p> We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.  To start off with, we need to estimate the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> Generally we assume that a dollar today is more valuable than a dollar in the future,  so we discount the value of these future cash flows to their estimated value in today's dollars: </p><h4> 10-year free cash flow (FCF) estimate </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF ($, Millions) </strong></td><td>US$2.68b</td><td>US$3.14b</td><td>US$3.06b</td><td>US$3.22b</td><td>US$3.35b</td><td>US$3.48b</td><td>US$3.61b</td><td>US$3.74b</td><td>US$3.87b</td><td>US$4.00b</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x11</td><td>Analyst x8</td><td>Analyst x4</td><td>Analyst x3</td><td>Est @ 4.16%</td><td>Est @ 3.89%</td><td>Est @ 3.70%</td><td>Est @ 3.57%</td><td>Est @ 3.48%</td><td>Est @ 3.41%</td></tr><tr><td><strong> Present Value ($, Millions) Discounted @ 8.9% </strong></td><td>US$2.5k</td><td>US$2.6k</td><td>US$2.4k</td><td>US$2.3k</td><td>US$2.2k</td><td>US$2.1k</td><td>US$2.0k</td><td>US$1.9k</td><td>US$1.8k</td><td>US$1.7k</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = US$21b</p><p> After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.9%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = US$4.0b× (1 + 3.3%) ÷ (8.9%– 3.3%) = US$73b</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= US$73b÷ ( 1 + 8.9%)<sup>10</sup>= US$31b</p><p> The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is US$52b.  To get the intrinsic value per share, we divide this by the total number of shares outstanding.  Compared to the current share price of US$87.7, the company appears   a touch undervalued    at a 24% discount to where the stock price trades currently.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/27862-dcf-1-dark-2/1767104542733?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/27862-dcf-1-dark-2/1767104542733"/><figcaption>NasdaqGS:EBAY Discounted Cash Flow December 30th 2025</figcaption></figure> <h2> The Assumptions </h2><p> The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at eBay as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 8.9%, which is based on a levered beta of 1.225. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> View our latest analysis for eBay </span></p><h3>SWOT Analysis for eBay</h3><div><div><p><strong>Strength</strong></p><ul><li>Earnings growth over the past year exceeded the industry.</li></ul> <ul><li>Debt is well covered by earnings and cashflows.</li></ul> <ul><li>Dividends are covered by earnings and cash flows.</li></ul> <ul> Dividend information for EBAY.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Earnings growth over the past year is below its 5-year average.</li></ul> <ul><li>Dividend is low compared to the top 25% of dividend payers in the Multiline Retail market.</li></ul></div><div><p><strong>Opportunity</strong></p><ul><li>Annual earnings are forecast to grow for the next 3 years.</li></ul> <ul><li>Good value based on P/E ratio and estimated fair value.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li> Annual earnings are forecast to grow slower than the American market.</li></ul> <ul> What else are analysts forecasting for EBAY?</ul> </div></div><h2> Moving On: </h2><p> Although the valuation of a company is important, it  is only one of many factors that you need to assess for a company.  It's not possible to obtain a foolproof valuation with a DCF model.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.   Can we work out why the company is trading at a discount to intrinsic value?   For eBay, we've put together three  fundamental  elements  you should look at: </p><ol> <li> <strong>Risks</strong>: To that end, you should be aware of the  <strong> 1 warning sign </strong> we've spotted with eBay . </li> <li> <strong>Future Earnings</strong>: How does EBAY's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. </li><li> <strong>Other High Quality Alternatives</strong>: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! </li> </ol><p> PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks just search here.</p><div><p>Mobile Infrastructure for Defense and Disaster</p><p>The next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.</p><p>Get the investor briefing before the next round of contracts</p><p><span>Sponsored On Behalf of CiTech</span></p></div></div></div>

EBAY

<p>eBay Inc. (NASDAQ:EBAY) is estimated to be 24% undervalued, with a fair value of US$116 compared to its current share price of US$87.74. Analysts have set a price target of US$93.97, which is 19% lower than the estimated fair value. The valuation is based on a two-stage Discounted Cash Flow (DCF) model, projecting future cash flows and discounting them to present value. The total equity value is calculated at US$52 billion, indicating a potential investment opportunity for shareholders.</p>

An Intrinsic Calculation For eBay Inc. (NASDAQ:EBAY) Suggests It's 24% Undervalued