Wells Fargo Downgrades eBay on Rising Competition from Vinted

Wells Fargo downgraded eBay (EBAY) to Underweight from Equal Weight on Monday, warning that intensifying competition in the U.S. from secondhand marketplace Vinted will likely lead to negative earnings revisions. The firm also cut its price target on the e-commerce company's stock to $92 from $105.

Competitive Pressures Mount

The downgrade is rooted in Vinted's aggressive entry into the U.S. market, which is forcing a costly defensive response from eBay's subsidiary, Depop. According to the Wells Fargo note, Vinted's U.S. advertising impressions reached approximately 127% of Depop's in April, helping it rapidly scale its U.S. daily active user base to about 20% of Depop's.

In response, Depop has significantly increased its marketing expenditures. Wells Fargo estimates that Depop's spending in July was three times Vinted's still-elevated level. The bank views this as a "strategically sound move" for eBay to use its Depop brand to compete, noting that Depop's younger demographic and discovery-based platform offer a more formidable defense than the core eBay brand, which saw limited success against Vinted in the U.K. and Germany.

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Impact on Earnings Forecast

The heightened marketing spend is expected to weigh on eBay's profitability. Wells Fargo has lowered its fiscal 2027 non-GAAP earnings per share (EPS) estimate for eBay by 10%, placing it 9% below the consensus forecast.

The firm anticipates that eBay's upcoming guidance will reflect this dilution. It projects that the company's third-quarter and full-year 2026 EPS guidance will come in 9% and 6% below consensus, respectively. Despite the expected earnings pressure, Wells Fargo noted that eBay may raise its outlook for gross merchandise value (GMV).