Why Did Ebay Stock Surge 6.42%, Or $1.94 Today?
Earnings season is firmly upon us, and eBay is generating tremendous interest from stockholders after posting a stronger than expected quarterly earnings report in Q4 2016. At the close of trade on Wednesday, 25 January 2017, eBay was trading at $30.23 per share, up 0.80% or $0.24. Fast forward to the pre-market trading session on Thursday, 26 January 2017 and the stock was up $2.02, or 6.68%, at $32.25 per share. By the afternoon session, eBay was trading at $32.31, up $2.08 or 6.89%. For traders, it was an eBay boom, what with strong volumes of call options driving trade on the day.
(Click on image to enlarge)
What Was Driving up the Price of eBay Stock?
Strong sales during the holiday quarter have helped eBay Inc to power its performance heading into 2017. Over the past 1 year, eBay stock has appreciated by 14% +, and the almost 7% spike in after-hours trading yesterday is notable. During Q4 2016, eBay’s profits were reported at $5.30 EPS, up $5.94 billion. This was remarkably greater than the $0.39 EPS year-on-year, when profits were up $477 million. eBay revenues are also up 3%, at a figure of $2.4 billion. eBay is desperately trying to rebrand and reposition itself in the industry, given Amazon’s huge appeal. The December holiday campaign was its first in 2 years, as eBay attempts to revitalize its search function and improve its rankings on Google. Part of the problem with eBay is its image. The company is perceived as an auction platform for second-hand goods.
Traders Temper Expectations in Q1 and for the Full Year in 2017
However, binary options traders will be delighted to know that eBay actually increased its number of active buyers by 2 million. There were 167 million active buyers on eBay during Q4 2016. More importantly, the value of all goods sold on the eBay platform increased to $22.3 billion, up 2%. Another bright spot on the horizon for eBay comes in the form of StubHub – the ticket seller. StubHub ticket sales spiked 20% and hit a huge revenue target of $279 million. But before you get all excited about eBay’s current performance, it’s important to take the company’s Q1 2017 projections into account. For the current financial quarter, eBay is anticipating revenue of $2.21 billion dollars, up from $2.17 billion, and EPS of $0.48, up from $0.46. This is hardly a glowing endorsement after such a fantastic final quarter. For 2017 overall, the adjusted earnings have been forecast at $2.03 with revenues of $9.5 billion. This is a downward revision of EPS (from $2.07), but an upward revision of its earnings on revenue of $9.36 billion.
eBay CEO Devin Wenig Confident of Growth Prospects
Whether eBay’s performance is sustainable or not depends on how well the company adapts to changing industry trends and preferences. eBay is doing a good job of marketing itself to millennials and other younger shoppers. For the year-to-date, the stock is up approximately 2% +, which is notable. Analysts were clearly positively surprised by the performance of eBay with 8% Y-o-Y earnings increases, and an EPS of $0.54. This bested forecasts by $0.01. Jim Cramer of TheStreet was duly impressed by eBay’s performance, and the actions taken by CEO, Devin Wenig. Don’t forget that eBay and PayPal were owned by the same company, but in 2015, eBay sold off PayPal so that it could compete against industry giant, Amazon. The holiday ad campaign run by eBay in December was hugely successful, and this reflects in current prices.
Disclosure: None.