EBAY shares are a perfect storm breakdown, driven by an expansion of the collectible market. It is partly fuelled by incentive controls and economic recovery. E-commerce firms were direct beneficiaries of a pandemic. As customer residence mandates were limited to digital purchases and entertainment. But this logic is very sophomoric. The collectibles market ranging from retail cards, sneakers, sticks, Funko pops to comic books has been very hot.
More specifically, with the rollout of the long-awaited Disney (NYSE: DIS), the Marvel cinematic world (MCU) Phase 4, and the Warner media (NYSE: T) HBO Max Slate of live-action programs and movies, the prices for key comics (key) grew astronomically. Conscious investors aware of the parabolic rise in collectibles will track prospects for exposure in eBay.
On February 3, 2021, eBay announced its financial results for the quarter ending December 2020 in the fourth quarter of 2020. The company posted $0.86 profit-per-share (EPS) except for non-recurring items. It is compared to $0.83 profit-by-share Consensus Analyst expectations, which was an estimate of $0.03. Revenues rose 28.3 percent year on year to 2.87 billion dollars, compared with 2.71 billion dollars. The Company has increased its quarterly dividend to 0.18 dollars per share. It has also extended its share buyback program by 4 billion dollars.
Guidance Upside
eBay also released upside guidance with EPS from $1.03 to $1.08 for Q1 2021. The Company has produced sales of $2.94 billion to $2.99 billion in Q1-2021 compared to the forecasts of $2.54 billion by the Consensus Analyst.
Takeaways Conference Call
“GMV in market places grew well ahead of expectations by 18 percent for Q4. During the holiday season, our buyers were very involved. One in ten online shoppers in the US has purchased something on eBay. This number was 1 in 7 in Germany. And this number in the United Kingdom was 1 in 4. In 2020, more than 100 days surpassed the 2019 peak of traffic.” CEO of eBay, Joe Lanonne, set the tone. Active buyers increased globally by 7%. Meanwhile active sellers grew by 5%, including small companies and customers. Organic sales rose 21% YY. In 2020, eBay added an additional $14 billion in GMV over the last seven years.
PayPal’s loss is the gains of eBay
Payments handled by eBay increased to 38% of the platform value. eBay effectively replaces PayPal. It also takes over the payment processing, which initially takes the extra 3% transaction fee from PayPal. PayPal’s loss is the benefit of eBay. Initially, sellers suffered from longer payment capture periods from PayPal immediate to almost 5 business days to collect payments. However, sellers have changed and eBay adds a further 3% to its sales cash. This is an important driver that investors cannot completely understand.
The Marvel Phase 4 roll-out is a strong booster to speed up main comics. Just to offer one example, the rollout of the live action series on Disney+, Speed and Wiccan’s main comic, the baby Vision and Wanda twins, launched in the #12 issue of Vision and Scarlet Witch, saw the price of a 9.8 graded issue of Comics Guaranty Corporation (CGC) explosive to $500, up from $40 in 2017. Raw ungraded copies could be found less than a year ago in a dollar bin in comic book shops. The financing of these rising prices is funded by consumer savings and probably stimulus controls.
Since MCU Phase 4 is only beginning to be implemented, the course is very long especially when it comes to manufacturing DC Extended Universe (DCEU) with projects from the Teen Titans, Green Lantern, Justice League Dark to Suicide Squad, Batman, Black Adam (starring Dwayne “The Rock” Johnson” and sequelae to the Aquamon and Wonder Woman which run into 2023. With an upcoming P/E of about 12.7 billion dollars in free cash flow and 4.1 billion dollars in cash in the full year, this valued game seems to have turned back into a game of development.
EBAY Pullback Opportunistic Levels
The use of rifle diagrams on the monthly and weekly schedules offers a view of the eBay inventory price action environment. The monthly rifle chart has a strong breakout with the 5-period average movement (MA) rising at $57.38, trying to smash the Fibonacci (fib) mark of 64.07 dollars. The Bollinger Upper (BBs) monthly targets the $72,53 fib on the upside of the monotonous stochastic mini pup that grinds up the 80-band. The weekly rifle chart has a breakdown of $60.12 on weekly stochastic crossover fuelled by a low (MSL) weekly market structure. The weekly top BBs are aiming for $68.49. The broad, longer time frames offer shallow opportunistic pullback levels of 61,42 dollars, 60,12 dollars, 59,58 dollars, 57,39 dollars and 55,42 dollars, and 53,57 dollars. Overhead trajectories range from $72.53 fib to $87.46.
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