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eBay Stabilizing and Looking to Break for the Bull
Posted by: Muhammad Bazil (IP Logged)
Date: October 16, 2012 09:43AM
The featured retailer in today’s market is eBay with a 1.85% rise, closing 90 cents up at $49.49. eBay (EBAY) has always been an ascending force in e-commerce history and continues to move forward even today. eBay is the best place to find a range of items to buy and sell. It has numerous vendors in China who deliver rare items to anyone’s doorstep. The “buy it now” process in eBay generates 75% sales. It appeals to the customer’s sense of urgency. The numerous vendors in China and elsewhere make it possible for eBay to get the job done at a range of prices. Recently eBay changed its logo. It claims to be the same with a new look. This has obviously impacted the recent rise in eBay shares.
With a market cap of $62.37 billion, eBay provides the tools and platforms for individuals with online and mobile commerce and payments throughout the world. eBay is an extremely hectic market with 10.7 million shares exchanging hands daily. Tech stocks are active because there are simply few barriers for technological advancements, and technology's progressive nature is non-stop.
eBay’s greatest strength lies in its compelling net income growth. It has maintained a constant revenue flow which has never subsided, primarily because of its solid foundation. Everyone knows about eBay and nearly everyone uses it. Additionally, EBAY has relatively low debt levels. Its only fragility lies in its weak operating cash flow, but it does not create a negative impact on its business as it is mostly IT concentrated.
eBay was the biggest winner in the market recently. Other winners include:
Alon Holdings Blue Square (BSI) – 17.3%
E commerce China DangDang (DANG) – 6.0%
Gordman Store (GMAN) – 5.7%
GameStop (GME) – 5%
Nomura Securities has upgraded eBay shares to "buy." Analyst Brian Norat has stated that potential investors have been underestimating PayPal’s contribution towards eBay of driving 65% of the profit. PayPal’s contribution margins are predicted to increase as costs come down. E-Commerce has always been pushed forward by IT expertise and concentrations. The operational costs are bound to come down eventually.
Hewlett-Packard (HPQ) made a rebound of 0.20% after sliding downhill following chief executive Meg Whitman's 2013 forecast that the company may need some time to recoup from its current problems. Netflix (NFLX) rose 6.5% and closed at $66.67. Facebook (FB) rose 0.54% as it announced that it has 1 billion active users. Other tech giants include Intel Corp., rising 0.38% to close at $22.47, Sandisk Corp. (SNDK) rising 2.3%, Micron (MN) rising 0.60%, Broadcom (BRCM) rising 0.69% and Microsoft (MSFT) rising 0.57% to close at $30.03.
Dow Jones' Internet composite has increased 19.3%, whereas the total market rose by 16.1%. Hence, tech stocks are looking at a bullish market. The global banks might have problems, but technology is at its peak and ever progressing. The Internet composites only trail telecommunication at a 22.6% rise and the consumer service sector at a 21.88% rise. Nasdaq has outpaced other U.S. stocks, rising 42 points, or 1.4%, to close at 3136. Tech stocks are also leading the S&P 500 which is at 0.72%. Yahoo! Inc. (YHOO) rose 2.8% to $16.04, retaining its strong position in the online market. Although Netflix rose, Pacific Crest analyst Andy Hargreaves says a drop as the subscriber growth is not supported by current trends.
It can be concluded that buying tech stocks in general is a good idea in today’s market. eBay shares are obviously preferable growth as they have always risen steadily and still continue to do so. Its biggest competitor is Amazon (AMZN) which fell by 0.75% but provides better delivery service than eBay, in general. But eBay does have a larger range of unique items which always gives it a niche edge in the e-commerce business. Potential investors could expect prices to go up to as far as $50.00 or more. Recent good news for eBay suggests that it will go with the bullish market. The potential investor is advised to buy at the breakout. Buying now is advised as tech stocks still remain extremely volatile.
Stocks Discussed: EBAY, HPQ, AMZN, YHOO, FB, NFLX,