eBay shares rise as collectibles business gains strength

eBay Inc. NASDAQ: EBAY is an online marketplace offering fixed-price auctions and listings of new, used, and refurbished merchandise that connects buyers and sellers around the world. eBay is a veteran Internet giant in the retail/wholesale industry that emerged during the Internet bubble and has stood the test of time to become one of the world’s largest e-commerce sites and digital marketplaces, surpassing Amazon.com Inc. NASDAQ: AMZN but imposing Etsy Inc. NASDAQ: ETSY, Shopify Inc. NYSE: BUY AND Mercari Inc. OTCMKTS: MCARY.

eBay has evolved from a high-growth stock into a blue chip Internet value play “Steady Eddie” that trades at just 11 times forward earnings, with a 2.1% annual dividend yield with a haul of war of $17.40 in cash per share.

A collector’s favorite destination

eBay has evolved into one of the largest marketplaces for collectibles. From toys, to comics, to trading cards, to sneakers, to jewelry, and bags, eBay provides liquidity to collectors. They expanded the collectibles business with authentication services. Its Authentication Guarantee allows collectors to shop with confidence as experts authenticate items before receiving them. This has helped eBay generate over $10 billion in gross merchandise volume (GMV). Check the heat map of the sector on MarketBeat.

Tokyo Authentication Center

Japan has proven to be one of the largest and fastest growing markets in the world for luxury personal goods. It allows its global collectors to access the inventory and liquidity of some of the world’s most exclusive brands.

The company has established its eighth authentication center in Tokyo, Japan, the first center focused primarily on cross-border trade. The Tokyo center currently authenticates luxury handbags and plans to expand to other categories over time. Its authenticity guarantee program was expanded to cover loose gemstones in collaboration with the Gemological Institute of America. Obtain AI-powered insights on MarketBeat.

Eddie’s consistent growth and profitability

eBay reported fourth-quarter 2023 earnings per share of $1.07, beating consensus analysts’ estimates of $1.03 by 4 cents. GAPP and non-GAAP operating margin were 16% and 26.7%, respectively. Revenue rose 3.6% to $2.6 billion, beating consensus estimates of $2.51. GMV grew 2% to $18.6 billion. The company returned $379 million to shareholders, including $250 million in stock buybacks and $129 million in cash dividends. The board of directors increased the dividend by 8% to 27 cents per share and authorized an additional $2 billion for its stock repurchase program, bringing remaining stock repurchase authorization to $3.4 billion .

eBay offers effective guidance

eBay expects first-quarter 2024 earnings per share of $1.19 to $1.23 versus consensus analyst estimates of $1.13. Revenues are expected to be in the range of $2.50 billion to $2.54 billion versus consensus estimates of $2.53 billion.

CEO Insights

eBay CEO Jamie Lanonne noted that despite significant macroeconomic pressure on discretionary spending in its major markets, the company still drove improved organic GMV growth, resulting in a 1% decline in 2023.

In the focus category, GMV grew by 4%, outperforming the remaining businesses by 7 points. eBay exited 2023 with 30% penetration, stabilizing the number of active and enthusiastic buyers and improving year-over-year improvement in acquisition, reactivation and retention. eBay’s first-party advertising momentum, launch of eBay International Shipping and expansion of financial services led to it generating 3% year-over-year organic growth to more than $10 billion.

Growth of eBay’s automotive business

The company has introduced artificial intelligence (AI) auto parts recommendations based on vehicle mileage as part of its predictive maintenance to boost auto parts sales. Its established position in terms of parts and accessories has led to over 100 million vehicles saved in the My Garage section by active customers.

CEO Lannone concluded: “We expect continued momentum in direct mail, despite exceptional growth in the prior year, as we grow our financial services offering for clients. And from a financial perspective, we are in a strong position to expand margins, drive solid earnings growth and deliver healthy capital returns to shareholders in 2024, while continuing to invest in high-ROI initiatives to keep us on the path to sustainable GMV growth.”

eBay analyst ratings and price targets I’m on MarketBeat. eBay colleagues and competitor actions can be found with MarketBeat Stock Screener.

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The daily candlestick chart for EBAY is a pennant pattern. The pennant formed after the flag base formed from a swing low at $40.61 on February 16, 2024. Shares rallied after moving to $46.28 on Q4 2023 earnings and having peaked at $52.82 on March 14, 2024. The descending upper trend line comprises lower highs and the ascending trend line composed of higher lows meeting at the apex point formed the pennant, which is a symmetrical triangle forming at the top of a flagpole. The daily relative strength index (RSI) peaked at the 81 band and fell below the 70 band. The pennant will result in a breakout when prices rise through the descending trend line or a collapse if the prices fall below the ascending trend line. The pullback support levels are at $49.82, $47.79, $46.28, and $44.55.

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