eBay shares rose following the announcement of a 9% workforce reduction. Should you buy these stocks?

eBay's stock price rose after it was announced that the company would lay off about 1,000 employees—or 9% of its workforce—to reallocate resources toward its fastest-growing business areas. This will be the company's second round of layoffs since the beginning of the year.

Reuters was the first to report on the workforce optimization, citing an internal memo from eBay CEO Jamie Yannon. The company later confirmed these plans to Barron’s. The publication explains which fast-growing segments are involved: these include, in particular, the resale of clothing and the trade in collectibles.

"Our strategy is working, but to capitalize on the significant opportunities that lie ahead, we need to carefully select the areas where we will focus our efforts and investments," Yanon wrote.

In February, eBay had already announced the layoff of about 800 employees—at the time, that figure represented 6% of its workforce, Bloomberg notes.

Like other e-commerce players, eBay has faced challenges due to rising gas prices and increasing instability in Europe. Nevertheless, the company “continues to make the right decisions,” wrote Daniel Kurnos, an analyst at StoneX Financial.

The platform is expanding its sales of luxury goods with verified authenticity, collectibles, and refurbished electronics. These categories attract buyers who are willing to pay more for high-value items, according to Reuters.

In May, eBay rejected GameStop CEO Ryan Cohen’s offer to buy the company for $56 billion, calling it “neither credible nor attractive.” Cohen promised to save $2 billion within a year of the deal’s completion and criticized eBay’s marketing expenses.

In July, eBay completed its acquisition of Depop, a popular clothing resale platform, for $1.4 billion. The deal allowed the company to attract a younger audience and strengthen its position in the growing resale market. In August, the company forecast third-quarter revenue above Wall Street expectations. However, it warned that the Depop deal cost $200 million more than the initially announced amount, which could negatively impact profits, according to Bloomberg.

On October 21, the company’s stock rose 1.4%, and it is up 41% year-to-date, while the S&P 500 index has gained about 12%. On October 15, eBay’s stock reached a record closing price—a few days after Morgan Stanley analyst Nathan Fezer added it to his list of top picks.

According to Kurnos of StoneX Financial, this trend shows just how conservative Wall Street analysts’ forecasts were and “how strong eBay’s momentum remains heading into the crucial holiday shopping season.” He recommended buying the company’s stock and set a price target of $136, implying an upside potential of 11.5%.

Among the key drivers, the analyst highlighted eBay Live—an interactive shopping platform built into the company’s app and website—as well as the growth of its resale business. Despite investors’ doubts, these initiatives indicate that “eBay is actually increasing its market share,” according to Kurnos.

At the same time, Wall Street as a whole takes a more cautious view of eBay’s prospects: 20 analysts recommend holding the marketplace’s shares in their portfolios, neither increasing nor decreasing their positions. Eleven analysts recommend buying the stock, while three others recommend selling it. The average price target is $117.42—3% below the current price.

This article was AI-translated and verified by a human editor