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Why eBay Stock Climbed 14.3% Last Month

By Keith Noonan – Jun 6, 2020 at 9:30AM

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The e-commerce company is seeing big tailwinds from heightened online retail engagement.

What happened

Shares of eBay (EBAY -0.29%) gained 14.3% in May, according to data from S&P Global Market Intelligence. Last month's gains came on the heels of a 33% pop for the company's stock price in April.

^SPX Chart

^SPX data by YCharts

eBay stock gained ground in conjunction with momentum for the broader market in May, and it's now up roughly 35% year to date. Shares also seem to have benefited from analysis of platform engagement date and news about the potential sale of the company's classifieds business.

A gavel on top of a laptop.

Image source: Getty Images.

So what

Dealreporter published a story on May 6 indicating that eBay's classifieds business was still being looked at as a potential acquisitions target by companies including Adevinta and Axel Springer. The outlet then reported on May 13 that Blackstone (BX), Hellman & Friedman, and Permira were discussing a joint bid for the unit. Bloomberg also published a report later in the month indicating that Naspers was also a potential buyer. 

Baird analyst Colin Sebastian published a note on May 12 indicating that eBay's monthly sales volume was up double digits year over year. He reiterated an "outperform" rating on the stock and maintained his $44 price target -- representing roughly 4.2% upside at the time of the publication. The analyst published a follow-up note on May 26 indicating that sales volume on the platform remained at elevated levels. 

Now what

eBay stock has continued to gain ground early in June. The company's share price has climbed roughly 7% in the month following momentum for the broader market and improved second quarter guidance.

EBAY Chart

EBAY data by YCharts

eBay is now guiding for sales between $0.25 billion and $2.8 billion in the second quarter, up from its previous target for sales between $2.38 billion and $2.48 billion. Non-GAAP (adjusted) earnings per share for the period are expected to be between $1.02 and $1.06, up from the company's previous target for per-share earnings between $0.73 and $0.80.

Management didn't give a detailed update for full-year performance, but it indicated that results for the period would likely come in ahead ahead of its previous targets. The company's last full-year target guided for organic currency-adjusted revenue between $9.56 billion and $9.76 billion -- representing year-over-year growth of roughly 2% at the midpoint. Adjusted earnings for the year were expected to come in between $3.00 and $3.10. Investors may get a more detailed full-year outlook when the company hosts its shareholder meeting on June 29.

eBay is valued at earnings roughly 14.6 times the average analyst target for this year's earnings, and 3.4 times the average target for expected sales.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends eBay and recommends the following options: long January 2021 $18 calls on eBay and short January 2021 $37 calls on eBay. The Motley Fool has a disclosure policy.

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Stocks Mentioned

eBay Inc. Stock Quote
eBay Inc.
$38.19 (-0.29%) $0.11
The Blackstone Group L.P. Stock Quote
The Blackstone Group L.P.
Naspers Stock Quote
$24.91 (-3.04%) $0.78

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