Is eBay Stock Headed To $20?

Question: If you own eBay stock (NASDAQ: EBAY), how would you react if its value plummeted by 75% or more in the next few months? While this may seem extreme, historical precedent shows such dramatic drops are possible.

Let’s examine the current context: Year-to-date, eBay has outperformed the S&P 500, with a 9% gain compared to the S&P 500’s 4% decline. This outperformance is partly attributed to increased investor optimism following Meta’s announcement that certain eBay listings would appear on Facebook Marketplace, potentially bolstering eBay’s competitive position.

However, broader market concerns about a potential U.S. recession, fueled by factors like tariffs, are driving a general sell-off. This market volatility raises concerns about eBay’s future performance.

eBay’s stock has demonstrated significant vulnerability during economic downturns. In 2022, it experienced a 45% decline within a few quarters. During the 2008 recession, the drop reached a staggering 75%. Currently, eBay is trading at $68, near its 52-week high of $71. Given its historical volatility, a severe market downturn could potentially push the stock price below $20. Surely, individual stocks tend to be more volatile than a diversified portfolio – so if you seek growth with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and delivered returns exceeding 91% since its inception.

Why Is It Relevant Now?

While eBay demonstrates promising potential amid its listings to be visible on Facebook, investors should carefully consider broader economic risks in their evaluation. As an online retail platform, eBay faces vulnerability to falling consumer spending. In fact, recently released data for retail sales showed a slight 0.2% increase for the month, a recovery from the previous month’s revised 1.2% decline. However, this fell short of the anticipated 0.6% growth. ^[1] Furthermore, the consumer confidence has worsened in to a nearly 2-1/2-year low in March.

Although inflation concerns have moderated, they remain a significant consideration. President Trump’s assertive policies regarding tariffs and immigration have renewed apprehensions about potential inflationary pressures. This uncertainty, coupled with the U.S. economy’s susceptibility to contraction, heightens recession possibilities.

The global geopolitical environment has become increasingly unstable, characterized by the persistent Ukraine-Russia conflict, heightening trade tensions, and deteriorating relationships with traditional allies including Canada, Mexico, and European nations. After a period of relative calm following a January ceasefire, Israel has resumed its military campaign in Gaza, with deadly strikes occurring on March 18th. These external factors introduce substantial additional risks to the market landscape. See our analysis here on the macro picture. Given these complex dynamics, investors would be prudent to maintain vigilant monitoring of macroeconomic indicators when evaluating positions in eBay or similar investments.

How Resilient Is EBAY Stock During A Downturn?

EBAY stock has seen an impact that was slightly worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on EBAY stock? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• EBAY stock fell 44.9% from a high of $66.81 on 6 January 2022 to $36.81 on 2 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 8 October 2024
• Since then, the stock has increased to a high of $70.93 on 25 February 2025 and currently trades at around $68

COVID-19 Pandemic (2020)

• EBAY stock fell 31.6% from a high of $38.49 on 4 March 2020 to $26.34 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 24 April 2020

Global Financial Crisis (2008)

• EBAY stock fell 74.7% from a high of $15.21 on 17 October 2007 to $3.85 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 19 April 2012

Protecting Wealth

eBay’s Revenues have declined at an average rate of 0.4% over the last three years, vs. an increase of 6.3% for S&P 500. Notably, the company’s operating margin has also decreased from 28.1% in 2021 to 22.5% in 2024. But, this doesn’t seem to be reflected in the company’s valuation. EBAY stock currently trades at 3.3x trailing revenues, which represents a slight premium compared to its three-year average P/S ratio of 2.5x.

Given the chances of a slowdown in growth and broader economic uncertainties, ask yourself this question: Do you intend to hold your EBAY stock now, or will you panic and sell if it begins to drop to $40, $20, or even lower levels? Holding on to a declining stock is never easy. Trefis collaborates with Empirical Asset Management—a Boston area wealth manager—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has integrated the Trefis HQ Portfolio in this asset allocation framework to provide clients with better returns and reduced risk compared to the benchmark index; offering a less volatile experience, as reflected in the HQ Portfolio performance metrics.

[1] Returns as of 3/18/2025
[2] Cumulative total returns since the end of 2016

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1. Retail Sales Edge Up in February but Miss Expectations, Justin Lahart and Suzanne Kapner, The Wall Street Journal, March 17, 2025 [↩]