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market data

eBay looking strong

Summary (from latest annual and quarterly report)

  • Total stockholders' equity : 11.59 billion USD
  • Market Cap is 34.7 billion USD ( last price of the stock is 32.04 USD)
  • eBay Inc is a commerce platform and provides online marketplace for sale of goods. The Company's Marketplace platforms include its online marketplace located at www.ebay.com, its localized counterparts and the eBay mobile apps
  •  Total stockholders' equity has increased from 6.57 billion USD in 2015 to 11.59 billion in 2017
  • Company has 1.97 billion USD in cash on account (from latest quarterly report)
  • Company has 19.2 billion USD treasury stock (this is negative item in the balance sheet and because of this total stockholders' equity is only 11.59 billion USD). In January 2015 Board of Directors  authorized a stock repurchase program that provided for the repurchase of up to $2 billion of eBay common stock. In June 2015, Board authorized an additional $1 billion stock repurchase program and in July 2016, Board authorized an additional $2.5 billion stock repurchase program. These stock repurchase programs have no expiration from the date of authorization
  • In 2017 company has 6.75 billion USD long-term debt, short – term debt is 2.21 billion USD (In 2015 company had 6.78 billion USD long-term debt , short-term debt was zero)
  • Company's revenue increased in 2016 to 9 billion USD from 8.59 billion in 2015
  • Net income in 2016 was 7.26 billion USD, Net income in 2015 was 1.72 billion USD
  • eBay has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future

 

 

Opinion about the company

Fundamentally it is a good company and in the future we can expect its growth (Total debt is very big (8.96 billion usd), big amount of cash on company's account, ROE is around 87 %).

 

Business and revenues should grow in the future, analysts remain long eBay with a $40/share price target

eBay is an American multinational corporation and e-commerce company, providing consumer-to-consumer and business-to-consumer sales services via the internet. It is headquartered in San Jose, California. Today it is a multibillion-dollar business with operations localized in over 30 countries. It previously offered online money transfers (via PayPal), which was a wholly owned subsidiary of eBay from 2002 until 2015. The website is free to use for buyers, but sellers are charged fees for listing items and again when those items are sold.

eBay generates two types of net revenues: net transaction revenues and marketing services and other (“MS&O”) revenues. Net transaction revenues are derived principally from final value fees (which are fees payable on transactions closed on Marketplace and StubHub platforms), listing fees and other service fees. MS&O revenues consist of Marketplace, StubHub and Classifieds revenue principally from the sale of advertisements, vehicles classifieds listing on Marketplace platforms, revenue sharing arrangements, classifieds fees, marketing service fees and lead referral fees. The company says it added 2M active buyers across its platforms and now has a total of 169M global active buyers. Net revenues increased  5%  to  $9.0 billion in 2016 compared to 2015, primarily driven by StubHub net transaction revenues and marketing, services and other revenues, partially offset by an unfavorable imp act from foreign currency movements relative to the U.S. dollar. FX-Neutral net revenues increased 7% in 2016 compared to 2015.

In the fourth quarter of 2016, eBay recognized a tax benefit of $4.6 billion as a result of the initial stages of realigning its legal structure and the associated tax rulings. In addition, eBay sold its equity holdings of MercadoLibre, Inc. for net proceeds of $1.3 billion. The pre-tax gain of $1.3 billion was recorded in interest and other, net on our consolidated statement of income.

Shares of eBay weakened after the company reports that Q1 gross merchandising volume rose 2% Y/Y to $20.9B vs. $21.0B expected. Looking ahead, eBay sees Q2 revenue of $2.28B-$2.32B vs. $2.32B consensus and FY17 revenue of $9.3B-$9.5B vs. $9.41B consensus. According to some analysts, shares are undervalued based on 2017 expected EPS and the company is still a favorable acquisition target. The company guided for a 6%-8% increase in 2017 revenues (on neutral currency basis) with an expected EPS midpoint of $2. This values eBay at ~16.5x 2017 diluted EPS, which is low for a company that has 169 million active buyers, a high take rate, and international expansion. Analysts remain long eBay with a $40/share price target.

Technical analysis - a good entry point for the short term traders (stop-loss at $31.5 and take profit at $35)

When we look at two years chart we can see that price of eBay stock is moving in "uptrend". As long the price is above $30 this stock is in the "BUY" zone and there is no indication of the trend reversal. I marked trend line on this chart and we can see that price is currently on the trendline. This could be a good entry point for the short term traders (stop-loss at $31.5 and take profit at $35). $30 represents very strong support level, if the price breaks this level it would be a very strong "SELL" signal and we have an open way to $27.5. If the price jumps above $35 (short term resistance level) that would be a confirmation of "BULLISH" trend and open way to $40.

 

 

Conclusion

Fundamentally it is a good company and in the future we can expect its growth. In the last quarterly report, the company says it added 2M active buyers across its platforms and now has a total of 169M global active buyers. Net revenues increased  5%  to  $9.0 billion in 2016 and the company guided for a 6%-8% increase in 2017 revenues (on neutral currency basis) with an expected EPS midpoint of $2. This values eBay at ~16.5x 2017 diluted EPS, which is low for a company that has 169 million active buyers, a high take rate, and international expansion. Analysts remain long eBay with a $40/share price target. As long the price is above $30 this stock is in the "BUY" zone and there is no indication of the trend reversal (we have a good entry point for the short term traders currently, stop-loss at $31.5 and take profit at $35). The price of this stock is correlated with the situation in the USA, the global economic situation also affects the price of this stock (especially stock markets in the USA..).

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