With its stable, smooth business model, eBay has appealing long-term fundamentals. With consumers increasingly preferring e-commerce over traditional retail channels, eBay is well-positioned to obtain a sizable piece of the future retail pie. As with many other healthy businesses, eBay valuation seems somewhat stretched. Cash-flow-based valuation suggests an intrinsic value of only $43 per share, which is almost 30% below the current share price. Conservative investors would definitely look for a better entry point, which could come about someday when perception of the business is more negative than it is now.
eBay Intrinsic Value Chart:
On the chart above, an intrinsic value of the company is graphed against the stock price. Intrinsic value above the stock price usually points to undervaluation of the company shares. Intrinsic value below the stock price points to overvaluation of the company shares.