eBay Earnings: Will It Benefit from Social Distancing?


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EBay, Daily

By: Tunku Ishak Al-Irsyad 

eBay (MT4 Symbol: EBAY) is set to report its first-quarter 2020 earnings after the market closes today (April 29). It is attracting added interest from investors as they will get an early look at how the global coronavirus pandemic has impacted the online marketplace. The increasing possibility of company asset sales following the appointment of new CEO Jamie Iannone (formerly COO of Walmart eCommerce), 6 months after abrupt resignation of Devin Wenig, also adds an additional spice to the earnings announcement. The company’s shares are up 8.3% year-to-date.

EBay’s core business is as an online shopping site that allows visitors to browse through available products listed for sale or auction through each company’s online storefront. The impact of the COVID-19 pandemic forced a lockdown and closure of malls as well as retail stores, which has shifted a substantial portion of consumer spending online and sparked an unprecedented increase in e-commerce activity. E-commerce sales have been reported to have climbed at the fastest pace since February (Source: Adobe Analytics). eBay is seen as a direct beneficiary of the current situation and most analystve has raised the target price of the stock.

eBay will report its quarter earnings on Wednesday after hours. The e-commerce giant is expected to report earnings per share of $0.72, up from $0.62 in the prior year quarter. Revenue is projected at $2.32 billion with the growth estimate for the current quarter at 7.5%.

Technical Analysis

It has been an interesting year for eBay shares, after it fell to the lowest price in 2 years to $26 (23rd March) before bouncing back 50% to the highest price of $40.34 on Monday. The upgrade of the stock call from underperforming to neutral by Mizuho Securities helped to fuel the bullish momentum of the share. The eBay share price has risen 8.3% for the year 2020.

From the technical perspective, the trend is currently bullish. The price is positioned higher than the 200 Day Moving Average and 50 Days Moving Average. The share currently trades at $39.31, slightly lower than the 2020 high at $40.34, which also acts as an immediate resistance. The subsequent resistance is at $41.97 (2019 high). The immediate support for the share is at $36.49 which is also near the 200 Daily MA ($36.80). The next support level is at $34.49, near the 50 Daily MA ($34.30).

The share price is on course for having its best performing month in history, with an increase of more than $11 of its share price. The 14-day RSI indicator is currently near the overbought level at 69.60, which signifies strong bullish momentum.

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