Should You Buy eBay Stocks – Shares of popular online marketplace eBay (EBAY) are down 18.2% from this year’s price. The EBAY momentum gained during the pandemic, fueled by online shopping trends, has waned as people return to in-person shopping. However, with the company launching initiatives to attract Gen-Z consumers, will EBAY be able to regain momentum going forward in the near future? Keep reading to learn our views.
shutterstock.com – StockNewsOnline marketplace operator eBay Inc. (EBAY) in the San Jose, California, want become a market for Gen-Z and millennials and is studying the possibility of adding cryptocurrency as a means of payment. EBAY already accepts NFT and may also be accepting crypto payments soon. “We don’t accept crypto at this time,” said CEO Jamie Iannone. But “on March 10, we’re going to go into a lot more depth about all of these things, payments, advertising, our focus categories.” With Gen Z a priority, this move could help expand its customer base.
However, companies today are grappling with reduced online demand, intense competition, and supply chain disruptions. The company has benefited from increased online spending during the COVID-19 pandemic, but with the infection rate dropping and people returning to physical shopping, the company is seeing a decline in active users. In addition, the company estimates that its margin will be depressed due to the scale of its investment. Active buyers on EBAY fell l 9% to 147 million in its fiscal fourth quarter, while gross merchandise volume (GMV), the value of all goods sold on the platform, fell 10.4% from a year ago to $20.70 billion. In addition, the company provided disappointing first quarter guidance, which led to a sharp drop in its share price. The company expects adjusted EPS in the $1.01 to $1.05 range and $2.43 billion to $2.48 billion in revenue; both forecasts were below Wall Street’s expectations. The company’s full-year guidance was also below expectations.
EBAY’s share price has slumped 28.9% over the past six months and 18.2% this year to close yesterday’s trading session at $54.42. The stock is currently trading below its 50-day and 200-day moving averages, indicating a downward trend.
Here’s what could shape EBAY’s performance in the near future:
Mixed Finance
EBAY’s net revenue has increased 5.4% year-on-year to $2.61 billion in its fiscal fourth quarter, ending December 31, 2021. However, its gross profit declined slightly from last year’s value to $1.92 billion. Also, its revenue from continuing operations was negative $893 million, representing a substantial decline from the previous year’s quarter value of $772 million. Its net profit grew 133% year-on-year to $1.97 billion. But earnings per share from continuing operations fell 232.4% from last year’s value to negative $1.47. However, non-GAAP net income from continuing operations and earnings per share from continuing operations were $647 million and $1.05, respectively, up 9.5% and 23.5% year-on-year.
Mixed Rating
In terms of future PE, EBAY is currently trading at 16.51x, which is 17.8% higher than the industry average of 14.02x. Also, the forward EV/Sales ratio of 3.27 is 158.9% higher than the industry average of 1.26.
However, EBAY’s forward EV/EBIT is 12.2% lower than the industry average of 12.10x, and its forward Price/Cash Flow is slightly lower than the industry average of 10.94x.
Impressive Profit Margin
EBAY’s gross profit margin of 74.57% was 107.9% higher than the industry average of 35.87%, while its EBITDA margin was 163.6% higher than the industry average of 12.60%. Also, its leveraged FCF margin of 32.63% is 537.7% higher than the industry average of 5.12%.
Furthermore, ROA and ROTC are 51.11% and 11.93% EBAY respectively compared to industry averages of 6.11% and 7.91%.
POWR Ratings Reflect Uncertainty
EBAY has an overall C rating, which translates to Neutral in our possession POWRA Rating system. The POWR rating is calculated taking into account 118 different factors, with each factor being weighted to an optimal level.
The stock has a C for Value, which is consistent with its mixed valuation.
It also has a C rating for Stability. Beta 1.15 justifies this value.
Among 75 stocks in Internet industry, EBAY is ranked #12.
Beyond what I have stated above, one can also look at EBAY’s value for Quality, Growth, Momentum and Sentiment here.
Check out the top-rated stocks in the Internet industry here.
The main thing is
EBAY is currently struggling with a decline in active users and has provided dismal first-quarter guidance, making investors anxious. Further, Street expects its revenue to fall 18.6% in the current quarter, 15.3% in the next quarter, and slightly in the current year. And its EPS is expected to fall 4.6% in the current quarter. Thus, given the near-term bearish sentiment, we think it’s best to wait for a better entry point in the stock.
How eBay Inc. (EBAY) Stack Up Against His Colleagues?
While EBAY has an overall POWR Rating of C, one might want to consider taking a look at its industry counterpart, trivago NV (TRVG) and the Tourist Zoo (TZOO), which has an A (Strong Buy) rating.
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