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eBay Makes for an Attractive Investment

August 20, 2014 | About:

eBay Inc. (NASDAQ:EBAY) is a global technology company which provides online services to people across the world. It facilitates online payments and mobile commerce. It is one of the largest online trading sites in the world. Global mobile ad spending increased by 105% to $17.96 billion in 2013. EBAY is trying to take advantage of this growth. The e-commerce market is growing bigger.

Performance recently

EBAY reported second-quarter earnings on July 16. Net income increased to $676 million from $640 million. Overall revenue jumped to $4.37 billion. 33.1 million shares were purchased by the company of its common stock. In the first quarter of 2014, shares of approximately $1.8 billion were repurchased. In the coming quarters, $2.2 billion shares may still be repurchased. With a market capitalization of $65 billion, net profit grew 6 percent to $676 million. During the quarter, total sales were at $4.37 billion, an increase of 13% from the same quarter in the prior year. Company enabled commerce volume increased to $62 billion. Cross-border trade increased by 26%.

In the first quarter of 2014, operating cash flow was at $1.2 billion. During this period, the company had $11.9 billion in cash. It recently launched a website for Latin America. EBAY added 6.6 million new buyers to its mobile commerce segment. To fuel its global expansion, EBAY has added machine translation company AppTek.

Third quarter forecast

EBAY is anticipating revenue of $4.3 billion to $4.4 billion for the third quarter. The company is forecasting adjusted earnings of $2.95 to $3 a share. Management expects an annual growth rate of 2% to 5%.

Role of PayPal

PayPal has been a key driver of EBAY’s share value. In late 2002, EBAY purchased PayPal for $1.3 billion. The business has gained momentum in recent quarters. It has contributed 45% to the total revenue. PayPal’s revenue surged 20% to $1.9 billion in the second quarter of 2013. PayPal’s core market places revenue increased 9 percent to $2.17 billion. PayPal has struck a deal with GE Capital and is offering a dual-branded retail credit card. This will provide PayPal flexibility for expanding its credit offerings. PayPal is expanding internationally, and this is going to reap huge benefits to the company. PayPal gained 4 million new active registered accounts and came to 152 million.

To end

EBAY is a reputed company that continues to reach customers globally. It has extended its reach of merchants, customers and retailers. The company is reaching mobile commerce leadership, which fueled its growth so far. The company generates revenue through classifieds and marketing. “We continued our momentum in the four competitive commerce battlegrounds of mobile, local, global and data,” John Donahoe, eBay’s chief executive, said in a statement.

EBAY has the potential to deliver strong financial performance and maintain a competitive position in the market. The company is already spending heavily and expanding in newer markets. The company is doing everything to make mobile shopping experience a hit with the customers. These days consumers prefer mobile shopping and surfing. EBAY is making an effort to capitalize on this. EBAY is a company that is always looking for innovation. It is focusing on the emerging markets. Global commerce is evolving and this e-commerce giant has surely a long way to go.

Rating: 3.0/5 (1 vote)



PhilipCohen - 2 years ago    Report SPAM

Retail Payments (and PayPal)—The Reality ... http://bit.ly/1nSA1Zl

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