eBay Hits Record High as Optimism Jumps
There is a massive upcoming battle for the online dollar, and while many of you would immediately think of Amazon.com, Inc. (NASDAQ:AMZN), keep a close eye on eBay Inc (NASDAQ:EBAY), an Internet play that many have kicked to the sidelines.
EBAY stock has steadily produced some stellar gains despite lurking in the shadows of retail giants like Amazon and Wal-Mart Stores Inc (NYSE:WMT).
Consider that eBay stock, with a market cap of $37.0 billion, just traded at a record high, up 13.95% year-to-date and an impressive 42% over the year.
The performance of EBAY stock is just below the returns of Amazon over the same periods, but well above the anemic showing by Wal-Mart.
While revenues and growth are lackluster compared to the staggering growth at Amazon, eBay does have 167 million active buyers in its global platform.
What eBay needs to do is to harness its user base and drive them to spend. With over 20 million items for sale on its global sales platform, there is excellent potential.
A key strategic move just announced by eBay is that the company will soon begin to guarantee three-day shipping in the U.S., starting this summer. In addition, the popular free shipping option will also be available on millions of goods.
The move is huge and could help eBay better compete against Amazon and Wal-Mart, which is also revamping the way it sells online via free shipping.
While there is no guarantee the move by eBay will prove to be a game changer, it is a good start for a company that has the right ingredients to have a more significant online presence.
In India for instance, eBay and China Internet powerhouse Tencent will inject $1.5 billion in major Indian e-commerce company Flipkart to try to expand its online retail presence in this rapidly growing consumer market.
A look at revenues shows a jump to $8.98 billion in 2016 following a decline in 2015. The positive revenue trend is expected to continue at 4.80% and 5.90%, for 2017 and 2018, respectively. (Source: “eBay Inc. (EBAY),” Yahoo! Finance, last accessed March 31, 2017.)
In the third quarter, eBay added over one million active buyers and followed this with another two million active buyers in the fourth quarter. (Source: “eBay Inc. Reports Fourth Quarter and Full Year 2016 Results,” eBay Inc, January 25, 2017.)
The Bottom Line on eBay Stock
We are clearly seeing improving fundamentals that could drive EBAY stock higher in the years ahead as the battle for online shoppers picks up steam.
The eBay stock chart shows the rally from the bullish double bottom formation in December 2016.
Chart courtesy of StockCharts.com
The rally by eBay stock was marked by a golden cross with upward trending 50-day and 200-day moving averages.
eBay stock is facing current resistance at $34.50. A sustained break could drive EBAY stock towards the $40.00 level.