Citizens has reduced its rating on eBay, moving the stock from Market Outperform to Market Perform. The brokerage said the move reflects a shifting risk-reward profile as eBay steps up investment behind Depop while facing heightened competition in the U.S. secondhand marketplace segment.
In its note, Citizens flagged concerns that eBay's effort to scale Depop will demand materially greater marketing outlays just as Vinted increases its U.S. push. The brokerage argued those higher customer acquisition costs could erode margins and that current consensus models may not fully incorporate the magnitude of marketing spending required.
Citizens acknowledged that eBay's core marketplace business remains fundamentally resilient, with particular strength in collectibles. Even so, the firm said the expected uplift in Depop-related marketing could weigh on overall profitability despite the durability of the legacy marketplace.
Competitive dynamics and marketing trends
The downgrade follows concerns about intensified competitive pressure after eBay's planned acquisition of Depop for about $1.4 billion. Citizens pointed to signs that rival Vinted is ramping its U.S. expansion, noting a sharp increase in paid search spending and improved app-store rankings.
Specifically, Citizens reported that Vinted's U.S. paid search spending rose from roughly $16,000 in February to about $236,000 in June, and that Vinted climbed to fifth place in Apple's App Store rankings. Depop improved its own ranking to ninth, but Citizens said that the step-up in competitive intensity is likely to require sustained marketing investment to hold share.
The brokerage estimated that Depop's marketing budgets could exceed $250 million in 2026, up sharply from $119 million in 2025, and noted that first-quarter marketing expense already reached $42 million. Citizens also observed that eBay ultimately paid about $1.4 billion for Depop, above the initially announced $1.2 billion, and suggested the higher price partly reflects additional investments made to keep Depop competitive before the deal closed.
Valuation and model risk
Citizens warned that current financial models, including 2027 consensus estimates, may not fully account for the elevated level of marketing investment the brokerage expects. With eBay shares trading at about 21 times its 2027 GAAP earnings estimate, Citizens said the stock appears fairly valued versus marketplace peers, leading to the downgrade.
The brokerage's view balances recognition of eBay's underlying marketplace resilience with the risk that customer-acquisition costs for Depop and growing competition could pressure earnings and margins.
Implications
The development highlights a focus on marketing intensity and competitive positioning within the online resale segment and raises questions about near-term earnings sensitivity to higher customer-acquisition spending.