![]() ![]() ![]() Since the Q2 release, the average revised analyst price target is around $50.00. EBAY is the 4th least expensive stock in the entire Nasdaq 100. AMZN trades at 63x, ETSY at 34x and WMT at 25x. Based on this year’s EPS estimate, EBAY has a 10x P/E ratio. In spite of the enhanced growth pipeline, it is trading at huge discounts to broadline retail peers. Yet eBay is holding its own with a relentless rollout of ‘tech-led re-imagination’ projects and on-trend takeovers. ![]() Amazon, Walmart and Etsy remain serious threats to market share. Yes, online and mobile commerce competition is fierce. The market isn’t giving enough credit for all of the above. It is a much more focused company than it was a year ago. With activist investors Elliott Management and Starboard Value applying pressure, eBay is hiking dividends and doing large stock buybacks. It has placed a greater emphasis on top-performing product categories which should ultimately drive stronger financial results. #2 - The Stock Is Undervalued…and Wall Street Knows ItĮBay’s tech buying spree has coincided with the launch of several new and enhanced marketplace tools for buyers and sellers. While the market focuses on Q3 results, investors should be looking ahead to better profits in 2024 and beyond. International shipping, payment tools and advertising all hold promise - but take time to develop. In addition to taking an appropriately aggressive M&A stance at a pivotal moment in technology history, eBay is investing in other areas to generate long-term growth. Investors don’t like to see profit margins decline, but in the long run, the temporary reversal will be worth it. Management is sacrificing near-term profitability for long-term revenue growth. This points to a classic case of market nearsightedness. eBay’s recent buyout spree (largely focused on high-growth potential AI businesses) comes with increased expenses in the short-term but increased opportunity for long-term growth. A few months prior, it bought AI fraud detection company 3 PM Shield. In May 2023, the company agreed to acquire AI-powered product authentication startup Certilogo. At the top of the list is recent acquisition activity. #1 - The Market Has a Case of MyopiaĮBay’s conservative Q3 guidance relates to several factors. Here are three reasons why a market overreaction has presented a favorable entry point for swing traders and long-term investors alike. In the eyes of the market, though, this more than offset Q2 revenue coming in at the high end of guidance and consensus-topping EPS - but it shouldn’t have. The midpoint of management’s Q3 earnings per share (EPS) range implies a mild 1.5% decline from the same period last year. The post-earnings selling activity stems from 1) a stock market that suffered its worst week last week since the March 2023 Silicon Valley Bank collapse and 2) softer-than-expected third-quarter earnings guidance. In contrast to rival, which rode a strong Q2 report to a fresh 2023 high, eBay is trading nearly $10 below this year’s peak - and nearly 50% off its October 2021 record high. Shares of the e-commerce platform provider continued to slide last week following a 10.5% post-earnings drop on July 27th. But unlike the reaction to the first quarter earnings beat, the market isn’t buying it. (NASDAQ: EBAY) beat Wall Street earnings estimates for the second time this year. ![]()
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