eBay is downgraded from buy to hold: at 123 it is slightly overvalued versus a roughly $110 DCF value, and its forward P/E of 18.4 is the highest in two years after a 41% gain this year; asset-light cash generation and a 9% workforce cut do not offset weak competitive innovation.

We have exciting news for eBay stock investors, as the company has announced a 9% reduction in its workforce. Of course, eBay was one of my top stock picks in 2026, with the stock price up more than 41% plus dividends since the start of the year.

It is one of the least asset-dependent business models, bringing together buyers and sellers on its e-commerce platform. Now, I wanted to share with you the details of the announcement that eBay released today, and make a substantial update to my recommendation and rating of eBay here in this video.

According to Reuters, eBay will cut 9% of its workforce to streamline operations and prioritize its best-performing units. This is the second round of layoffs this year alone.

This is why eBay and many other companies are concerned about the slowdown in consumer spending. So they are preparing for this economic slowdown. eBay cut about 6% of its workforce earlier this year, and today they announced they will cut another 9% of that workforce.

Remember earlier in 2026, they announced the acquisition of the secondhand fashion marketplace Depop. Usually when companies make an acquisition, there are a lot of redundant and unnecessary roles, right?

You don't need two human resources departments, two accounting departments, two marketing departments, two boards of directors, two executive directors, two financial directors, etc. You do not need two company headquarters.

So when you make an acquisition, there is a surplus of labor, and you choose who you want to keep and who you want to let go in order to achieve those synergies that you expected when you made this acquisition.

eBay's stock has risen by more than 41% since the beginning of the year in 2026, in addition to dividend payouts. It was one of my top stock picks, especially when considering the risk versus the return.

This is a relatively less risky business compared to some other technology stocks you can buy. It is also a relatively asset-light business model that brings together buyers and sellers. eBay does not own any of the inventory on its platform. eBay does not deal with any shipping and handling logistics, and does not own any warehouses, trucks, aircraft, etc.

So she only manages that platform, which I see as looking like a dinosaur. There have been very few improvements over the decades, and the sales process remains the same, which is why it is not great competitively.

It did not achieve significant revenue growth, etc.

But the business generates large amounts of free cash flow because it does not require much reinvestment. The expansion on both sides of the equation, with more buyers and sellers transacting frequently, has led to strong growth, although it has not been explosive growth.

It has certainly generated explosive returns for investors.

But it is now trading at its highest valuation in two years. It is trading at a forward price-to-earnings ratio of 18.4. This is the highest level this stock has traded at according to this valuation scale.

So I also updated my discounted cash flow valuation for eBay, and I value the business at about $110 per share. The stock is trading at 123, so I would say it is slightly overvalued when applying the margin of safety using my discounted cash flow model.

Looking at the price-to-earnings ratio, I would say again that it is slightly overvalued. So, as I said, I rated it as a buy opportunity all year round, and my last update was on August 24, 2026.

However, today I will be downgrading eBay stock. I no longer believe it is a buying opportunity, so I will downgrade this stock to "hold" and keep my conviction level the same.

I have an average level of confidence in this rating.