eBay Nearing Support Ahead of Earnings

eBay Inc. (EBAY) reports Q2 2021 earnings after Wednesday’s closing bell, with analysts looking for a profit of $0.95 per-share on $3.0 billion in revenue. If met, earnings-per-share (EPS) will mark a 12% decline compared to the same quarter last year. The stock sold off more than 10% in April, despite meeting Q1 estimates with a 26.4% year-over-year revenue increase, and rallied into July’s all-time high in the mid-70s.

Riding the Non-Fungible Token (NFT) Wave

The e-commerce provider has outperformed larger rivals so far in 2021, posting a 30% return compared 2.7% for Amazon.com Inc. (AMZN) and less than 1% for Dow component Walmart Inc. (WMT). The explosive growth of non-fungible tokens (NFT) has underpinned revenue and investor sentiment since sales were introduced in May. It’s a perfect place for this initiative, with digital trading cards, music, entertainment, and art backed up by blockchain technology.

eBay discussed this emerging growth channel at the time of the release, noting that “NFTs offer greater access to a broader audience of collectors and creators. In the same way digital publishing brought more exposure for writers, digital collectibles bring greater opportunity for artists and creators. We plan to double down on this idea – combining eBay’s global reach with the principle that anyone can find almost anything on our platform”.

Wall Street and Technical Outlook

Wall Street consensus remains unenthusiastic, with an ‘Overweight’ rating based upon 7 ‘Buy’, 2 ‘Overweight’, 10 ‘Hold’, and one ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions. Price targets range from a low of $59.20 to a Street-high $81.00 while the stock closed Friday’s session on top of the median $66.00 target. This suggests the company will need to raise Q3 guidance to trade at higher prices.

eBay completed a round trip into the 2018 high at 46.99 in June 2020 and broke out, entering an uptrend that stalled just above 60. The stock cleared that barrier in June 2021, lifted into July’s all-time high at 74.13, and turned south into August. It’s currently trading below the 50-day moving average for the first time since May and testing support in the mid-60s. So far at least, this looks like garden variety profit-taking, suggesting even higher prices in coming months.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.