Wells Fargo bearish on eBay, highlights rising U.S. competition from Vinted

Investing.com -- Wells Fargo downgraded eBay to Underweight from Equal Weight in a note to clients on Monday, citing escalating U.S. competitive intensity that it expects to drive negative earnings revisions.

Analyst Ken Gawrelski cut his fiscal 2027 non-GAAP EPS estimate by 10%, to 9% below consensus, to reflect greater dilution from eBay's Depop acquisition, which closed July 30.

The firm expects "escalated Depop marketing spend to defend against competitor Vinted entry into the U.S. market."

Gawrelski notes that Vinted entered the U.S. with an aggressive marketing push, reaching about 127% of Depop's U.S. ad impressions in April and helping scale its U.S. daily active users to roughly 20% of Depop's base.

Depop is said to have responded with materially higher spending, with July outlays estimated at three times Vinted's still-elevated level.

Despite the dilution, the firm called it "a strategically sound move from eBay" to use Depop to compete against Vinted, after limited success defending in the U.K. and Germany with the eBay brand. Wells Fargo added that Depop's younger demographic, lower average selling price and discovery-led platform should provide "a more formidable defense."

The firm expects third-quarter and full-year 2026 EPS guidance to come in 9% and 6% below consensus on Depop dilution, though it sees eBay raising its gross merchandise value outlook.

Wells Fargo lowered its eBay price target to $92 from $105, based on 20 times fiscal 2027 GAAP EPS. It flagged an outstanding GameStop bid for eBay as an upside risk, and a potential Depop commission cut as a downside risk to estimates.

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