Uber and Lyft spent the better part of the decade torching cash to win city after city, and investors punished both stocks every time losses widened.
It took years for the market to accept that spending was buying share that would eventually convert into pricing power. That same test is now playing out in a far less glamorous corner of the economy: secondhand clothes.
EBay Inc. (EBAY) shares have fallen roughly 15% from their May 2026 high as investors have grown nervous about how much the company will spend to defend fashion resale app Depop against European rival Vinted’s U.S. push.
Wells Fargo and Citizens both downgraded the stock in early August, warning Depop-related marketing costs could pressure 2027 earnings. The sell-off has persisted, even after eBay posted second-quarter revenue up 15% year over year.
The spending fight is playing out amid a takeover battle
The timing isn’t incidental. EBay’s board is simultaneously fending off a $56 billion unsolicited bid from GameStop chief executive Ryan Cohen, who has built a stake approaching 10% of the company and argued in his rejected offer that eBay’s marketing spend had grown bloated without producing user growth, according to CNBC.
EBay’s board called the bid “neither credible nor attractive” in a May letter filed with regulators, but Cohen has kept building his position and taking his case directly to institutional shareholders.
If the Vinted spending war keeps pressuring margins without a clear payoff, it hands Cohen fresh ammunition. If it works, it becomes the clearest evidence yet that eBay’s board was right to bet on its own strategy over a sale.
Morgan Stanley says the market has this backward
Morgan Stanley disagrees with that framing entirely.
In a research note published Aug. 18, analysts led by Nathan Feather reiterated an overweight rating on eBay with a $127 price target, arguing investors are treating Depop spending as value-destructive while ignoring the size of the prize.
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The firm expects tactical pressure into eBay’s initial 2027 guidance but says the medium-term case has actually strengthened.
The argument leans on Vinted’s own record. The Lithuanian company used the same aggressive spending playbook to win market after market in Europe, especially the U.K., and it was valued at roughly $9 billion in an April share sale led by investment firm EQT.
Vinted’s monthly active users equal about 14% of Europe’s population, Morgan Stanley notes, while Depop’s U.S. penetration sits closer to 4%. That gap, the firm argues, is the opportunity, not the risk.
Rather than treat next year as one outcome, Morgan Stanley mapped four scenarios for how the spending fight could unfold, each with a probability attached:
- Arms race (40% probability): Both companies keep escalating spend, pressuring 2027 earnings near term, but Depop is expected to end up with dominant U.S. share once the cycle fades, given it already has roughly 3.5 times Vinted’s domestic user base.
- Relative peace (30% probability): Both sides signal willingness to spend but pull back on unprofitable advertising, producing a milder earnings hit while volume growth keeps compounding.
- Vinted retreats (20% probability): Vinted can’t match Depop’s spending and redirects elsewhere, an outcome Morgan Stanley calls positive for the stock now and long term.
- EBay retreats (10% probability): EBay decides winning the U.S. costs more than it’s worth and pulls back, offering near-term relief but ceding the category to Vinted for good.
Morgan Stanley calls the fourth outcome the least likely and the only true long-term risk, which is why the firm isn’t backing off the stock, despite expecting a rough initial guide.
History shows big spending doesn’t always win
The confidence rests on precedent, and the precedent cuts both ways. Vinted lost three straight rounds against Depop in the U.K. before finally outspending its rival roughly 3-to-1 starting in 2021, a bet that flipped the market and left Vinted with 25 times more U.K. users than Depop today.
Poshmark tells the opposite story. It went public as the top U.S. player in 2021, but marketing costs outgrew sales growth for two straight years, and it was eventually sold for $1.2 billion.
The lesson is uncomfortable for anyone hoping for a quick answer. This fight isn’t decided by who spends the most, but by who has the retention and product fit to make that spending compound.
EBay’s CFO, Peggy Alford, has already signaled some of Depop’s budget will come from reallocating existing marketing dollars rather than entirely new spend, a detail that softens the bear case but hasn’t stopped the downgrades.
The next few guidance cycles will show whether Depop’s early lead behaves more like Vinted’s U.K. win or Poshmark’s fade, and that answer will shape how much leverage Ryan Cohen has the next time he asks eBay’s board to reconsider.
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