Our team at FCF-Advisors recently had an insightful discussion with eBay Inc.‘s Vice President and Head of Investor Relations, John Egbert, about the company’s free cash flow performance.

As a key holding in our FCF US Quality Strategy and FCF US Quality Innovation Strategy, eBay Inc. is a leading e-commerce company that established a reputable and impactful marketplace for buyers and sellers. Driven by its high growth margins and robust historical free cash flow performances, eBay consistently outperforms its competitors in the Food and Staples Retails Industry.

Here are some key takeaways from our meeting:

  1. eBay’s focus on scale and non-nuanced goods have given them a competitive advantage in the e-commerce industry.
  2. The company’s high growth margin of 73% indicates its strong financial performance.
  3. The recent drop in eBay’s market cap can be attributed to macro events, rather than any fundamental issues within the business.
  4. eBay does not participate in the sales of non-discretionary goods, which could present risks and opportunities in the future.
  5. The company has invested in AI technology for decades, highlighting its commitment to innovation.
  6. While there is overlap with Chinese e-commerce platforms, it remains relatively small.

eBay is one of the best (Food and Staple Retails industry) companies in our Free Cash Flow Quality Model #FCFQM, an alpha model to identify a company with strong and sustainable profitability that could potentially generate consistent excess returns.

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