eBay's Earnings Beat and Depop Deal Fuel Comeback Bid

eBay Inc. (EBAY) shares rose about 3.8% following a robust Q4 2025 earnings report that surpassed analyst expectations. Revenue came in at $2.97 billion, beating estimates of $2.87 billion, while a key metric, gross merchandise volume (GMV), grew to $21.2 billion. This represents nearly 6% growth globally and a strong 10% increase in the U.S., indicating the platform is expanding its customer base.

The cornerstone of the report was the announcement that eBay will acquire the secondhand clothing marketplace Depop from Etsy Inc. for $1.2 billion in cash. This move is a direct strategic play to capture more Gen Z and Millennial shoppers, a demographic where eBay has traditionally struggled.

Beyond the headline acquisition, the report highlighted three powerful growth engines. Advertising revenue is approaching $2 billion on an annualized basis, with over 4.8 million sellers now using promoted listings. This shows advertising is becoming an embedded, high-margin behavior on the platform.

The second engine is recommerce, or the sale of pre-owned goods. This category accounted for over 40% of eBay's GMV in 2025 and grew about 10% for the year, establishing a distinct competitive advantage. Finally, the Depop acquisition offers the most potential for new growth, bringing in 7 million active buyers, nearly 90% of whom are under age 34.

This news matters because it suggests eBay is successfully executing a multi-pronged strategy to reignite growth after a period of stagnation. The company is no longer just an online auction house; it's building a diversified business with high-margin ad revenue and a unique position in the booming recommerce market.

The Depop acquisition is particularly significant. It directly addresses eBay's biggest weakness—an aging user base—by injecting a vibrant, young community focused on fashion, the fastest-growing retail segment. If eBay can successfully integrate Depop and cross-sell to these new users, it could create a durable growth story.

For the stock, which had been trading lower in 2026, this report provides a fundamental reason for optimism. Analysts have already begun raising price targets, with some, like Needham & Company, setting targets as high as $122, implying significant upside from current levels.

However, investors must weigh this optimism against real risks. Management acknowledged that some GMV growth was driven by cyclical categories like collectible coins and trading cards. Furthermore, the Depop deal will dilute earnings in the near term, with accretion not expected until 2028, and gross margins are facing pressure from necessary investments in trust and safety programs.