Is May a good month for buying eBay shares?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the outdoors, enjoys… read more.
on May 10, 2021
  • eBay repurchased approximately $292 million worth of shares during the first quarter of 2021
  • eBay is looking into a new payment option which should be cryptocurrencies
  • Shares of eBay are fairly valued

eBay (NASDAQ: EBAY) shares have advanced from $50.4 above $65 since the beginning of January 2021, and the current price stands around $62. eBay continues to expand its business, and at the current stock price, this company is fairly valued.

Fundamental analysis: Shares of eBay are fairly valued

eBay is an online e-commerce marketplace that continues to generate steady revenue and a healthy profit margin. eBay reported first-quarter results in April; total revenue has increased by 42% Y/Y to $3.02 billion while GAAP EPS for the same period was $0.82.

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 “We delivered another strong quarter for the company and an excellent start to the year for our buyers and sellers. We generated tremendous volume and earnings, with revenue growth the highest it has been since 2005,” said Jamie Iannone, Chief Executive Officer at eBay.

It is important to say that annual active buyers grew by 7%, for a total of 187 million global active buyers, while annual active sellers grew by 8% and reached 20 million active sellers. Total revenue has increased above expectations (beats by $50 million), and the company raised its outlook for the second quarter.

eBay expects revenue of $2.98 billion to $3.03 billion and GAAP EPS of $0.67 to $0.72 in the second quarter of the 2021 fiscal year. eBay repurchased approximately $292 million worth of shares during the first quarter, representing more than five million shares.

The company has plans to expand its business while eBay CEO Jamie Iannone said that eBay is looking into a new payment option which should be cryptocurrencies, but the company is also exploring ways to utilize non-fungible tokens (NFTs).

The board of directors declared a $0.18/quarterly share dividend which will be payable on June 18 to stockholders of record as of June 1, 2021. eBay trades at less than thirteen times 2020 EBITDA, and with a market capitalization of $40.73 billion, shares of this company are fairly valued.

Technical analysis: Bulls remain in control of the price action

Data source: tradingview.com

Shares of this company have been moving in an uptrend last several months, and if the price jumps above $65, it would be a signal to trade eBay shares, and we have the open way to $70. On the other side, if the price falls below $55, it would be a strong “sell” signal, and the next target could be around $50 or even $45.

Summary

eBay trades at less than thirteen times 2020 EBITDA, and at the current stock price, this company is fairly valued. eBay reported better-than-expected first-quarter results last month,  the number of active buyers grew by 7%, and the company raised its guidance. eBay repurchased approximately $292 million worth of shares during the first quarter, and the company is looking into a new payment option which should be cryptocurrencies.