Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online auction expert eBay (Nasdaq: EBAY ) were getting seriously bid up by investors today, as they gained as much as 17% in intraday trading.
So what: Strong first-quarter results and an optimistic outlook fueled the big gains for eBay today. For the quarter, the auctioneer posted $0.55 in per-share profit on $3.3 billion in revenue. Profit per share was up 17% from a year ago, while revenue climbed 29%. Both the top and bottom lines exceeded Wall Street's estimates, which called for $0.52 in earnings per share on $3.15 billion in sales.
What may be even more exciting for investors, however, was the fact that eBay provided a full-year outlook that called for $2.30-$2.35 in earnings per share. Current analyst estimates were looking for EPS of just $2.30 for the year.
Now what: The investment community had been concerned that eBay's business had stalled out, but recent results make that look less likely. Many are even calling this a "turnaround." But is it a turnaround that investors should be betting on? Shares aren't dirt cheap, but there's a lot to like about eBay -- its business has produced very attractive returns and it's sitting on a strong balance sheet. On the other hand, the company historically has been acquisition-happy, which doesn't always end well. It's also up against some particularly tough competition from online retail giant Amazon.com (Nasdaq: AMZN ) .
That said, eBay shareholders have good reason to be celebrating today. And if the company keeps up what it showed in the first quarter, the future could look very bright.
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