eBay Inc. (EBAY)

Discount cash flow analysis

Sell Overvalued by 50.9%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for eBay Inc., based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $15.98 $15.73 $15.49
Terminal Growth% 0 $16.09 $15.84 $15.59
  +1% $16.20 $15.94 $15.69

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $31.89 (overvalued by 1.21%) - 12 months ago
  • valuereq created a new valuation of $30.46 (undervalued by 31.75%) - almost 8 years ago
  • valuereq created a new valuation of $30.02 (undervalued by 27.2%) - almost 8 years ago
  • valuereq created a new valuation of $32.01 (undervalued by 35.64%) - almost 8 years ago
  • SethWellbourne created a new valuation of $15.84 (undervalued by 10.85%) - over 8 years ago
  • SethWellbourne created a new valuation of $15.97 (undervalued by 27.96%) - over 8 years ago
  • GordonGekko created a new valuation of $13.68 (undervalued by 17.63%) - over 8 years ago
  • TheCrunchBlog created a new valuation of $23.88 (undervalued by 6.7%) - almost 9 years ago
  • GordonGekko created a new valuation of $22.34 (undervalued by 11.98%) - almost 9 years ago
  • TheCrunchBlog created a new valuation of $28.13 (overvalued by 0.88%) - over 9 years ago
  • GordonGekko created a new valuation of $28.82 (undervalued by 1.55%) - over 9 years ago
  • BudFox1987 created a new valuation of $49.15 (undervalued by 57.03%) - over 9 years ago
  • JStew82 created a new valuation of $21.15 (overvalued by 32.43%) - over 9 years ago
  • GordonGekko created a new valuation of $27.65 (overvalued by 11.66%) - over 9 years ago

Comments

Q1 Earnings and Skype

Valuation's structure changed significantly as a result of lower revenue expectations and restructuring plans to spin-out Skype. The change to total valuation was negligible, however fundamentals have changed with the company's new strategy.

By SethWellbourne, over 8 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 39,096
Net Debt (Long-term borrowings less cash): -2,423
Equity Value: 16,052
Number of Shares Outstanding: 1,286,000,000
Calculated value per share: $15.84

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.