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eBay Gains as It Moves Forward with StubHub Sale

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On July 17, CNBC reported that e-commerce company eBay is exploring the sale of its ticket exchange company StubHub. Sources told CNBC that it’s still early in the process but many buyers have shown interest.

eBay stock surged 2% after the news. Adding to the stock gain was the company’s Q2 2019 results. RJ Hottovy, an equity analyst at Morningstar, told Bloomberg that eBay’s management’s interest in the sale of StubHub caught the market’s attention. The stock, however, closed with a loss of 2.2% yesterday. Meanwhile, the S&P 500 Index also closed with a loss of 0.7% yesterday.

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How did eBay fare in second-quarter results?

The stock soared nearly 6% higher in post-market trading yesterday. The company reported its Q2 2019 results after the market closed. Its revenue rose 1.8% to $2.6 billion, in line with analysts’ estimates. EPS of $0.68 surpassed analysts’ estimates of $0.62. The company’s advertising sales also rose more than 130% to $89 million in Q2 2019.

Bloomberg reported yesterday that the company can still bag revenue from its loyal and existing customers. The company has been facing a lot of activist pressure from Elliott Management, who has a $1.4 billion stake in eBay. The pressure is to sell off pieces of its marketplace platform, according to an article in The Street yesterday.

Strategic initiatives

The news of the sale of StubHub comes after a strategic operating review that eBay conducted in March this year. On March 1, eBay announced that it had commenced a strategic review of its portfolio of assets including StubHub and eBay Classifieds Group.

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Portfolio update

In its Q2 earnings results, eBay stated it’s analyzing the value of StubHub and Classifieds in its portfolio to further maximize shareholder value. The company has also reached an agreement to sell its flash sale German business brands4friends.

It has also reached an agreement to buy a 5.5% stake in the e-commerce marketplace Paytm Mall to mark its hold in India again. This comes two years after eBay sold its India operations to Flipkart, an article in Business Today stated.

YTD performance

The company has surged this year, outperforming the broader market S&P 500 Index. eBay has returned close to 39.0% YTD, while the S&P 500 Index has gained 19.0% YTD.

Market performance

The earnings season looks dismal this quarter. Markets have indicated that we might be heading into an earnings recession. The earnings season kicked off this week with mixed results from big banks, which took a toll on the market.

The SPDR Dow Jones Industrial Average ETF (DIA) tracks the Dow Industrial Average Index. DIA closed with a loss of 0.42% yesterday. DIA has returned 16.7% YTD. The Invesco QQQ Trust (QQQ) tracks the NASDAQ Composite Index. QQQ has gained 24.5% YTD. The ETF closed with a loss of 0.49% yesterday. The SPDR S&P 500 ETF (SPY) tracks the S&P 500 Index. SPY closed with a loss of 0.66% yesterday. SPY has returned 19.1% YTD.

Stay tuned to get the latest on upcoming earnings this week.

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