eBay’s financial report in the last quarter was a mixed one – most notably, its y-o-y declined by 5% to $2.4 billion, and the gross merchandise volume was down 11% to $17.7 billion.
But the pioneer e-commerce brand did not disappoint the shareholders as over $421 million was returned to them, and $120 million was paid in dividends. In addition, up to $130 million in shares were repurchased, which was as projected.
Historically, eBay stocks have performed well on the market in the past. But as rising inflation and cost of living threatens the US economy and the world, what is the best decision for your eBay stocks?
Find out the answers below.
First, a quick look at the Q4 estimates for eBay stock.
Projections for eBay stocks in Q4
Before deciding the fate of your eBay stocks, it is important to understand what industry experts say about them.
eBay is set to present its fiscal Q4 results on February 22, 2024. And according to Checkman, the trusted interactive financial platform, eBay stocks are expected to meet revenue expectations. The consensus estimate for eBay stocks is $2.46 billion, and the Q4 net estimate is $2.455, which means they are in line with the projections.
Stock earnings in Q4 are expected to edge past the consensus estimates, bringing the overall net revenues to $9.74 billion in FY2022.
The same analysis also expects eBay’s adjusted earnings per share or EPS in Q4 2022 to touch $1.08, which is above the consensus projection of $1.06. In the last quarter, eBay’s adjusted net income decreased due to an increase in loss on warrants and loss on equity investments.
On the other hand, discontinued operations in 2021 due to the pandemic resulted in a one-time gain of $10.5 billion for the e-commerce platform.
Accordingly, eBay’s earnings per share in FY2022 are expected to be along the same lines and beat the consensus estimates, even if it is by a margin.
What about eBay’s stock price?
Chackman valuation of eBay estimates that its stock price as of February 3, 2024, is $51 against the current market value of $50.66, making it about 2% higher. In addition, Forbes also predicts that eBay stocks will rise by as much as 60% in the trading weeks leading up to the Q4 financial report.
eBay’s month-to-date MTD, and year-to-date YTD, as of February 2, 2024, are also very high at 2% and 22%, respectively – which results in a low percentage of cumulative percentage results of 70%.
By contrast, the MTD and YTD for S&P 500 companies stand at a reasonable 1% and 7% bringing the cumulative total returns to 84%.
Sell, Buy, Or Hold Your eBay Stocks?
The projections for eBay stocks on the market seem shaky for traders, and rightfully so.
But after considering the industry’s projections, holding on to your eBay stocks seems to be the smart choice.
Below are the reasons to support why holding your eBay stocks, at least for a while, can work in your favor.
Traditionally, buying stocks when their price is above the current market has never been advisable, and the current valuation of eBay is 2% above the market price. In addition, eBay stocks are projected to rise by more than 60%, which is not an ideal time to invest more money.
Expert traders who have a good understanding of the stock market always try to make a move by buying more for their portfolio when there is a recent drop in the price of a stock.
Generally, when stocks on the market experience a steep drop, chances of it rising quickly also decrease. However, investment stocks that undergo unusually high drops, up to -10% or more, also have an unusually higher chance of improving because any hint of bad news about a company’s profits/gains can trigger the market to overact.
According to recent data, in the last ten years, there were 235 instances when eBay stocks experienced a 21-day drop of 8.7% or more. Of those, 142 instances saw EBAY stocks rise steadily over the subsequent 21 trading days at NASDAQ.
The positive return probability of eBay stocks at 60% is still on the lower side compared to other S&P 500 companies that have a projected PRP between 71.1% and 78.4% from the previous to the next trading period of 21 days.
Selling eBay stocks in the current market can be profitable, but finding the right buyer who is willing to pay the amount you ask might be difficult. Historically, eBay stocks are profitable and low risk, so buyers are aplenty, but the unstable market has put most traders on edge.
Similarly, buying eBay stocks will also mean that you will pay to end up paying more, so holding them seems the best strategic move. To make an informed decision about buying or selling eBay stocks, investors can use tools like VectorVest that provide market analysis and projections to help them maximize their returns.
If you wish to buy eBay stocks, monitor the market, wait for the price to drop, and then make your move. eBay has a credible stock market record and sells at a favorable valuation, so investing in this company can help you build financial wealth.
Why eBay stocks are profitable at the market
In the e-commerce industry, eBay has still considered a low-risk investment risk stock because of its smart business model.
EBay’s business model is called the asset-light business model, so the giant e-commerce platform does not own any of the products or services available on it. This also means that eBay does not require billion-dollar investments for logistics infrastructure and fulfillment centers, unlike other e-commerce platforms such as Amazon.
eBay simply charges a percentage of the transaction between the buyers and sellers that congregate on the platform. This asset-light business model has enabled eBay to grow its earnings per share by about 23.6% in the last decade.
eBay stock also has a favorable valuation making it less risky than other e-commerce stocks. When compared with other e-commerce giants like Etsy and Amazon, eBay has the least price-to-free-cash-flow, price-to-earnings, and price-to-sales metrics.
Instances of eBay stocks fluctuating between underperforming and overperforming is not an isolated case since most S&P 500 companies undergo the same. However, despite its mixed results in Q3 – earnings missing the marks and revenues topping estimates; eBay has established itself on the market, so keep an eye out for its Q4 financials.
But for now, keep whatever eBay stocks you own and make a move once the price falls.