Global digital marketplace platform eBay NASDAQ: EBAY
stock has sold off to level not seen since June 2021 after having peaked at $81.19 in October 2021. The Company has provided weaker guidance moving forward to set the bar low. Shares are trading at 16X forward earnings and the Company is still set to receive approximately $3 billion from the sale of its eBay Korea division. Despite a slow down in growth, the Company has a fortress balance sheet and a mountain of cash that can afford a reversion in the near term as the iconic Company continues to grow even at a slower pace in the mid-single digits. eBay is synonymous with e-commerce
and has rode the digital migration during the pandemic to capitalize on the explosion in premium collectibles ranging from jewelry, sneakers, Funko pops
, to cards and comics. It is the world’s largest marketplace
providing much-needed liquidity and transparency to help transcend the hobby into a business for many collectors. Prudent investors that have been patiently waiting
for entry into the premier collector’s marketplace can watch for opportunistic pullback levels to gain exposure.
Weak Q4 2021 Guidance
On Oct. 27, 2021, the Company provided mixed guidance for Q4 2021 for EPS coming in between $0.97 to $1.01 versus $1.00 consensus analyst estimates with revenues coming in between $2.57 billion to $2.62 billion versus $2.65 consensus analyst estimates.
Conference Call Takeaways
eBay CFO Steve Priest commented on the fiscal Q3 2021 conference call, “A number of factors influenced the growth differential between the U.S. and our international markets during the quarter. My abilities back to pre-COVID levels in many of our largest international markets, diminishing the volume tailwinds we benefited from in third quarter. Changing consumer behavior, including uptake in leisure activities and travel, also might have impacted e-commerce guides internationally. Additionally, category mix varies in our international markets, which have lower exposure to certain fast-growing verticals like collectibles. A higher concentration of items from cross-border trade that are more difficult to source amid the ongoing supply chain disruptions. Finally, our focus category rollouts on more nations in our international markets. However, as our innovation playbook expands to more categories and countries, we are confident our international growth trajectory will increase. In the U.S., GMV grew 22% versus GMV of 2019. Growth in our domestic marketplace was driven by strong execution against our strategic pillars, big growth within e-commerce. Residential mobility improved in the U.S. and continues to trail Europe markets. While leisure activities and travel increased in line with normalcy, including the lingering impact of government stimulus and [Indiscernible] The precise [Indiscernible] About likely a net positive contributor to U.S. growth in the near-term. And aggregate numerous puts and ties between regions, but we remain encouraged by the modestly positive underlying growth in our business.” He concluded, “Given our fortress balance sheet and strong underlying free cash flow, we are updating our share buyback plan for 2021 from $5 billion to $7 billion, which implies approximately $3 billion of repurchases during the fourth quarter. Over all, our capital allocation objectives remain unchanged. We'll preserve financial flexibility to execute on strategy and drive long-term value creation. We aim to drive organic growth in our business, and will look for opportunities to supplement that growth, with disciplined acquisitions and investments. We will optimize our financial flexibility, access to debt, and cost of capital, and we'll continue to deliver meaningful returns to shareholders -- to share repurchases and dividends.”
EBAY Opportunistic Pullback Levels
Using the rifle charts
on the weekly and daily time frames provides a precision near-term view of the price action landscape for EBAY stock. The weekly rifle chart had a pup breakout that peaked in the $80.96 Fibonacci (fib) level.
Shares collapsed on earnings reaction to bottom out quickly at the $70.77 fib before coiling back up to test the 5-period moving average (MA) at $76.57. The quick reversion caused the weekly stochastic to form a bullish mini pup stochastic as it nears the 80-band. The weekly upper Bollinger Bands (BBs) sit at $82.42. The daily rifle chart formed a market structure high (MSH) sell signal on the breakdown below $78.40. The falling 5-period MA sloped back up as EBAY bounced off the daily lower BBs to form a make or break with a rising 5-period MA at $75.70 which needs to crossover up through the 15-period MA at $76.41. The daily market structure low (MSL)
buy signal triggered on the bounce above $74.99. Prudent investors can watch for opportunistic pullback levels at the $74.98 fib/daily MSL trigger, $73.77 fib, $72.44 fib, $71.28 fib, $69.33 fib, $67.96 fib, and the $66.58 fib level. Upside trajectories range from the $80.96 fib up towards the $89.32 fib level.
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