eBay Share Forecast January 2022 – Time to Buy EBAY?

Shares of American multinational e-commerce corporation eBay (NASDAQ: EBAY) are in the red today after closing at $64.49 as of January 5^th (19:46 EST). Despite being one of the prime beneficiaries of the pandemic, eBay has lost 12 million buyers from its peak. It is now shedding customers as nearly 9 billion doses of COVID-19 vaccines have been administered and world economies are reopening.

eBay – Technical Analysis

According to the financial statement released by eBay, the market cap is at $40.778 billion with total assets worth $29.257 billion. Revenue for 2020 was at $10.26 billion with a profit margin of 55.26% compared to $8.55 billion in 2019.

 

Moving averages such as Exponential Moving Average (10)(65.63), Simple Moving Average (10)(65.67),  Exponential Moving Average (20)(66.23), Simple Moving Average (20)(65.56) and Exponential Moving Average (30)(67.14) are indicating a sell action. Oscillators such as Relative Strength Index (14)(36.65),  Stochastic %K (14, 3, 3)(55.06),  Commodity Channel Index (20)(−68.21),  Average Directional Index (14)(25.48) and Awesome Oscillator(−1.56) are neutral.

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Recent Developments

By the first quarter of 2021, eBay has 166 million active buyers, compared to 161 million buyers in the second quarter of 2020. After this, eBay started losing customers as economic reopening gained momentum. This is evidenced by its most recent quarter ended Sept. 30, where active buyers were down to 154 million. As eBay lost millions of buyers over the last few quarters, gross merchandise value fell from $21.7 billion in the third quarter of 2020 to $19.4 billion in Q3 2021.

eBay still managed to increase revenue from $2.2 billion to $2.5 billion by increasing the percentage it takes from each sale. It increased the percentage it takes from each sale from 9.7% in Q3 last year to 12.1% in Q3 this year. This has allowed the share price to increase in 2021 despite the lower buyer totals. Management has also put a halt to almost all promotional offers. This has resulted in a decrease in sales and marketing expenses by 18.8% in its most recent quarter, down from 22.3% last year. But the reduction in the promotion can be attributed to the company’s customer losses.

In the last earnings report released back in November, eBay’s holiday quarter outlook calls for another significant growth slowdown. Executives predict that eBay’s organic sales gains will land between 3% and 5%, compared to 10% in the previous quarter. The company is now expecting to spend $7 billion on share buybacks this year, up from the $5 billion it targeted a quarterback.

Should You Buy EBAY Shares?

eBay’s rising payments and advertising sales should offset declining merchandise volumes compared to late 2020. Investors should expect amplified returns due to strong stock buybacks.  There could also be surprises ahead as the company holds its annual investor event in early 2022. There could be more surprises when the company holds its early 2022 annual investor meet. Management will be ambitious in describing the platform’s new financial outlook early next year as evidenced by its sales offerings, its cash flow, and its profitability metrics.

eBay has also done a stellar job on profitability, averaging a pre-tax income margin of 28.3% in the last decade. eBay’s revenue grew at a compounded annual rate of 1.2% in that same period. But it has not done well on innovation as its site is the same since 2010. Listing on item on eBay is still a slow and tedious process. That being said, the shares are relatively cheap. You can buy eBay shares at the moment if you believe in its consistent profits, an inexpensive valuation, and an asset-lite business model.

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