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Today, eBay (EBAY) stock is pushing higher after GameStop (GME) launched an audacious $55.5 billion unsolicited bid to acquire the e-commerce giant.
Following the rally, EBAY sits firmly above its major moving averages (MAs), albeit with an RSI approaching 70, indicating overbought conditions that often signal a pullback ahead.
Still, there’s reason to believe that eBay shares — already up more than 35% versus their YTD high — have significant further upside from here (with or without GME).
GameStop Has Valued eBay Stock at a Premium
EBAY has received an unsolicited cash-and-stock offer from GameStop that values its shares at $125 each — signaling another 14% upside from current levels.
Moreover, GME chief executive Ryan Cohen’s plan to cut $2 billion in annual costs suggests eBay has been significantly undervalued and under-optimized as a standalone business.
According to Cohen, as a joint entity, eBay could leverage GameStop’s 1,600 retail locations as authentication hubs for high-value collectibles, addressing one of its biggest hurdles — trust.
In short, investors are loading up on EBAY stock today, hoping the merger will create a new, battle-hardened Amazon (AMZN) competitor.
EBAY Shares Are Attractive Even Without GME
Ryan Cohen will go straight to EBAY shareholders should the company’s board decline his $55.5 billion proposal, he confirmed in a post-announcement interview.
However, even if the GME deal fails, eBay shares remain a compelling proposition for long-term investors.
As famed investor Jim Cramer put it in a recent segment on CNBC, “eBay is much better than it used to be,” praising the firm’s shift away from general merchandise toward high-margin categories like luxury watches, sneakers, and trading cards.
Ritholtz’s chief executive, Josh Brown, is also bullish on eBay stock, which he views as a cash flow machine with a disciplined capital return program (currently pays a 1.14% dividend yield).
Still, at about 4x sales, EBAY trades at a discount to its e-commerce peers despite its asset-light model and robust advertising revenue growth, which recently saw a double-digit uptick.
eBay Remains Buy-Rated Among Wall Street Analysts
Wall Street firms also remain constructive on EBAY shares, believing its commitment to artificial intelligence — including a refined AI-powered search interface — will improve the platform and the shopping experience over time.
The consensus rating on eBay sits at “Moderate Buy” currently, with price targets as high as $132, indicating potential upside of about 20% from here.
