Citizens downgrades eBay as Depop spending, rising competition cloud outlook

Investing.com -- Citizens downgraded eBay to Market Perform from Market Outperform, saying the risk-reward has become more balanced as intensifying competition in online resale and heavier investment in Depop are likely to weigh on profitability.

Citizens' downgrade reflects growing concerns that eBay's push to expand Depop will require significantly higher marketing investment just as competition from secondhand marketplace Vinted intensifies in the U.S. The brokerage believes those higher customer acquisition costs could weigh on margins and are not fully reflected in current earnings expectations, even as eBay's core marketplace business remains fundamentally resilient.

The brokerage said competitive pressure has increased following eBay's planned $1.4 billion acquisition of Depop, with rival Vinted ramping up its U.S. expansion through higher paid search spending and improved app rankings. While Citizens expects eBay's core marketplace to remain resilient, particularly in collectibles, it believes higher marketing costs to support Depop could pressure earnings.

Citizens said Vinted increased its U.S. paid search spending from roughly $16,000 in February to $236,000 in June, while climbing to fifth place in Apple's App Store rankings. Depop also improved its ranking to ninth, but the brokerage said the sharper competitive intensity is likely to require sustained investment.

The brokerage estimates Depop's marketing spending could exceed $250 million in 2026, up sharply from $119 million in 2025, after first-quarter marketing expense reached $42 million. It also noted that eBay ultimately paid about $1.4 billion for Depop, above the initially announced $1.2 billion purchase price, which it believes partly reflects additional investments made to keep the platform competitive before the deal closed.

Citizens said current models, including 2027 consensus estimates, may not fully account for the higher level of marketing investment. It added that eBay shares, trading at about 21 times its 2027 GAAP earnings estimate, appear fairly valued relative to marketplace peers, prompting the downgrade.

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