E-commerce and auction platform eBay (NASDAQ: EBAY)
shares are forming a perfect storm breakout powered by the acceleration of the collectibles market arguably fueled in part by stimulus checks and economic recovery. E-commerce companies were clear pandemic
benefactors as stay-at-home mandates confined consumers to digital transactions and entertainment. As COVID vaccinations
accelerate, the logical thinking is that a return to normalcy will see a reversion with e-commerce transactions as evidenced by the March Nasdaq 100 correction
. However, this logic a bit sophomoric. The market for collectibles ranging from trading cards, sneakers, pins, Funko pops to comic books has been scorching hot. Most notably the comic book collectibles market has seen prices for key comics (keys) rise astronomically with the rollout of the long-awaited Disney (NYSE: DIS)
Marvel Cinematic Universe (MCU) Phase 4 and the WarnerMedia (NYSE: T)
HBO Max slate of live action programs and motion pictures. Prudent investors aware of the parabolic spike in collectibles can monitor opportunistic pullback opportunities in eBay, the world’s largest and most liquid online market place, to consider exposure.
Q4 FY 2020 Earnings Release
On Feb. 3, 2021, eBay released its fiscal fourth-quarter 2020 results for the quarter ending December 2020. The Company reported earnings-per-share (EPS) profit of $0.86 excluding non-recurring items versus consensus analyst estimates for a profit of $0.83, beating estimates by $0.03. Revenues rose 28.3% year-over-year (YoY) to $2.87 billion versus $2.71 billion. The Company raised its quarter dividend to $0.18 per-share and expanded its share buyback program by an additional $4 billion.
eBay also issued upside guidance for Q1 2021 with EPS in the range of $1.03 to $1.08 versus $0.86 consensus analyst estimates. The Company guided Q1 2021 revenues in the range of $2.94 billion to $2.99 billion compared to the $2.54 billion consensus analyst estimates.
Conference Call Takeaways
eBay CEO, Jamie lannone, set the tone, “For Q4 gross merchandise volume (GMV) in marketplaces grew 18% well ahead of expectations… Our buyers were very active during the holiday season. In the U.S., 1 in 10 online shoppers bought something on eBay. In Germany, that number was 1 in 7. And in the U.K., that number was 1 in 4… more than 100 days in 2020 exceeded peak 2019 traffic levels.” Active buyers grew 7% globally while active sellers grew 5% including small businesses and consumers. Organic revenues grew 21% YoY. In 2020, eBay added an incremental $14 billion in GMV, which was more than the past 7 years.
PayPal’s Loss is eBay’s Gains
eBay managed payments grew to 38% of on-platform volume. This is where eBay basically replaces PayPal (NASDAQ: PYPL) and takes over the payment processing, which means they take the additional 3% transaction fee originally taken by PayPal. PayPal’s loss is eBay’s gain. Initially, sellers were hurt by the longer payment capture times going from instantaneous with PayPal stretching to nearly 5 business days to receive payments. However, sellers have adjusted, and eBay adds an additional 3% in its coffers from sales. This is a major driver that investors may not be fully aware of.
What’s Driving Up Comic Collectibles Prices?
The Marvel rollout of Phase 4 is a clear driver for the acceleration of key comics. Just to give an example, with the rollout of the live action Wandavision series on Disney+, the key comic that had the first appearance of Speed and Wiccan, the infant twins of Vision and Wanda, introduced in Vision and Scarlet Witch issue #12 saw prices explode as high as $500 for a Comics Guaranty Corporation (CGC) 9.8 graded issue, up from $40 in 2017. Raw ungraded copies could be found in the dollar bin in comic book stores less than a year ago. The finance these skyrocketing prices are financed by consumer savings and arguably stimulus checks. Since the MCU Phase 4 is just starting to get underway, the runway is very long for especially when factoring in the slate of D.C. Extended Universe (DCEU) slate of projects ranging from the Teen Titans, Green Lantern, Justice League Dark to Suicide Squad, Batman, Black Adam (starring Dwayne “The Rock” Johnson” and sequels to Aquaman and Wonder Woman extending into 2023. With a trailing P/E around 12, $2.7 billion in full-year free cash flow and $4.1 billion in cash, this value play appears to be transforming back into a growth play.
EBAY Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provides a bird’s eye view of the price action landscape for EBAY stock. The monthly rifle chart has a powerful pup breakout with a rising 5-period moving average (MA) at $57.38 as it tries to break the resistance at the $64.07 Fibonacci (fib) level. The monthly upper Bollinger Bands (BBs) targets the $72.53 fib on the upside powered by the monthly stochastic mini pup grinding up through the 80-band. The weekly rifle chart has a pup breakout powered by weekly market structure low (MSL) trigger on the breakout through $60.12 on the weekly stochastic cross up. The weekly upper BBs target $68.49. The strong wider time frame charts provide for shallow opportunistic pullback levels at the $61.42 fib, $60.12 fib, $59.58 fib, $57.39 fib, $55.42 fib, and the $53.57 fib. Upside trajectories range from the $72.53 fib up towards the $87.46 level.
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