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Could eBay Stock Rise 20% More amid Online Shopping Boom?

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eBay (NASDAQ:EBAY) stock has been rising lately. Notably, e-commerce stocks from Amazon to Etsy in the US and JD to Pinduoduo in China have been soaring in the wake of the coronavirus outbreak.

Households have been shopping online due to travel restrictions to curb the spread of COVID-19. As a result, e-commerce companies like eBay have seen a huge increase in sales, which draws more investors to stocks.

At $49 per share, eBay stock has pulled up 90% from its pandemic lows in March. So far, eBay has risen 36% year-to-date.

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eBay stock spots over 20% upside potential

eBay has rallied due to strong first quarter-earnings and the pandemic-driven boom in online shopping. The company delivered revenue of $2.4 billion, which beat the consensus estimate by about $60 million. Also, the company posted an adjusted EPS of 77 cents, which smashed the consensus estimate at 71 cents.

Overall, investors liked eBay’s first-quarter results. The stock has risen more than 25% since the report.

However, the rally in eBay stock isn’t done. eBay’s peak target price of $60 implies the potential to rise at least 20% more from the current level.

eBay upgrades Q2 financial outlook

The COVID-19 outbreak has generally rattled businesses across most industries. However, a few industries have seen a boom from the pandemic. Recently, eBay raised its financial outlook. The pandemic continues to fuel online shopping.

Originally, the company expected to deliver second-quarter revenue of $2.38 billion–$2.48 billion. Now, eBay expects the revenue to be $2.75 billion–$2.80 billion. The company expects to post an adjusted EPS of $1.02–$1.06. Previously, the company forecast an EPS of 73 cents–80 cents. eBay stock rose more than 6.0%, its best so far in June, due to the financial outlook upgrade.

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Shareholder capital return

eBay stands out as one of the e-commerce companies with generous shareholder capital return programs. Among the major e-commerce companies, the list that includes Amazon, Alibaba, and JD, eBay is the only one that currently pays dividends.

On top of dividends, eBay’s stock repurchase program has returned billions of dollars to investors. In the first quarter, eBay returned $4.0 billion in repurchases to investors. The total shareholder capital return was over $4.1 billion including dividends.

eBay’s stock repurchase program has $3.2 billion remaining. Investors flocked to eBay stock and hoped for a boost to the repurchase program. The company has been working on the divestiture of its Classifieds business—a transaction that could net as much as $12 billion. eBay boosted its repurchase program following the sale of its StubHub unit. The repurchase program has usually provided a boost to eBay’s stock price.

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