Meta Bringing eBay Listings To Facebook Could Be 'Win-Win Partnership,' Analyst Says

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A new collaboration between Meta Platforms (META) and eBay (EBAY) offers a chance for both stocks to benefit, according to Morgan Stanley analysts.

Meta announced Wednesday that it would enable Facebook Marketplace users in Germany, France and the U.S. to browse listings from eBay. If interested in buying the item, Facebook would send the users to eBay. Meta offered the change in response to a $840 million fine from the European Union late last year. European regulators accused Facebook Marketplace of breaking competition rules.

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"This could prove to be a win-win partnership with eBay gaining incremental distribution while Meta better monetizes Marketplace," wrote Morgan Stanley analysts Nathan Feather and Brian Nowak in a client note Thursday. "This test appears to be part of Meta's effort to comply with an E.U. antitrust order, although U.S. inclusion implies it may have a wider reach."

EBay stock jumped nearly 10% Wednesday following the news. Trading closed Thursday in honor of former President Jimmy Carter.

What Deal Could Mean For eBay, Meta

Facebook Marketplace is one of the largest resale platforms in the world, Morgan Stanley's client note said, with 1 billion monthly active users as of the last time Meta disclosed the figure in 2021.

"From a buyer perspective, our survey data shows 52% of resale shoppers bought an item through Facebook Marketplace in 2023, only behind eBay at 65%," Feather and Nowak wrote. "With that being said, there is minimal data on the GMV (gross merchandise value) that flows through the platform given Facebook Marketplace does not monetize local pickup sales on a typical take rate model."

The and size of the arrangement between Meta and eBay is not yet known. But Feather and Nowak said the partnership could deliver Facebook "a large amount of monetizable inventory, helping better capture the value created by Marketplace (as we expect EBAY would pay a fee per completed transaction)."

For eBay stock, there is "clear upside" from gaining exposure to Facebook Marketplace's audience. The Morgan Stanley analysts said eBay could see a low-single-digit percent boost to its earnings before interest and taxes from the arrangement. But there is upside for high-single-digit gains, in their view.

"Although there are reason s for optimism, it's not a given this will gain adoption," the note said. "Facebook Marketplace is primarily local pickup while eBay has moved to items with a more niche audience; the integration could be canceled after testing or only launched in the EU (roughly 15% of eBay's GMV); and it's unclear if the friction of moving off-site to transact will gain consumer adoption."

Morgan Stanley rates both Meta and eBay with a positive overweight view.