Why eBay gained 15% in June
Actions of eBay (NASDAQ: EBAY) gained 15.3% last month, according to data provided by S&P Global Market Intelligence. The rally, which was boosted by a series of developments, not only reversed some significant pullbacks the stock suffered earlier in the year, but extended it well. record territory.
Don’t look for just one catalyst. On the contrary, a series of bullish stocks all contributed to eBay’s strong performance in June.
This series began with the official announcement that eBay would offer guaranteed authentication of luxury handbags sold through its e-commerce platform. While this is an encouraging development on its own, it also reflects a more radical overhaul of the company that allows it to do something bigger than rival. Amazon (NASDAQ: AMZN) is still struggling to do: offer some guarantees on the quality of products sold by third parties on its platform.
Now ebay.com offers certified refurbished electronics as well as certified refurbished household items among others, and the latter category was also launched less than a month ago.
Image source: Getty Images.
Perhaps the main driver behind the rise in eBay’s stock price in June was the continued rationalization of the entire company. It has been learned that regulators would not seek to prevent the sale of eBay’s classified ad business to the Norwegian company Adevinta (OB: ADE). In addition, the company sells most of its South Korean business to E-Mart and Shinsegae Group’s search engine operator Naver. As is the case with the introduction of authenticated handbags, these planned disposals reflect a larger philosophical shift – in this case, towards a closer focus on its e-commerce and online auction platform.
Finally, although announced in May, eBay’s foray into the non-fungible token (NFT) market likely contributed to last month’s big gain, bringing the company closer to the hub of new kinds of consumption and speculation. digital.
These moves (and others) are steps in the right direction for the company, which arguably hasn’t made the most of its difference from the mighty Amazon – its focus on selling unique products that require attention. personalization – elaborate announcements. But eBay is starting to do a better job in this regard and, at the same time, is removing lines of business and units that don’t add enough long-term value to the business to justify keeping them. In this context, this e-commerce business is a quality business growth stocks worth owning.
Potential investors, however, would be advised to be patient. With June’s gains on the books, eBay shares are now up 165% from last March’s low and 50% from November’s low … and they’re showing some pressure on profit taking. Notable rally setbacks have been the norm for a year now, and this rally should not turn out differently.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. James brumley has no position in any of the stocks mentioned. The Motley Fool owns shares and recommends Amazon. The Motley Fool recommends eBay and recommends the following options: $ 1,920 long calls in January 2022 on Amazon, $ 1,940 short calls in January 2022 on Amazon, and $ 65 short calls in June 2021 on eBay. The Motley Fool has a disclosure policy.
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