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E-commerce giant eBay Inc ((EBAY - Free Report) ) came up with Q2 results after the closing bell on July 20. Overall, the mood was optimistic on in line earnings and a revenue beat, pushing the stock up around 6.9% after hours. There was more from eBay to impress investors as management raised the guidance and the company's board approved an incremental $2.5 billion share repurchase program.
Behind the Headline Numbers
The company posted earnings of $0.36 per share (accounting for stock-based compensation), which was in line with the Zacks consensus estimate. Net revenues of $2.23 billion breezed past the estimate of $2.17 billion and grew 5.7% year over year.
Gross Merchandise value grew 4% year over year in Q2, boosted mainly by the contribution of StubHub. Gross Merchandise value in StubHub grew 35%. eBay's Marketplaces’ segment recorded a 3% jump in GMV.
Net transaction revenues also showed an improving trend in the Marketplace segment declining just 0.2% year over year in the quarter. The rate of decline this time is, however, much lower. StubHub’s net transaction revenues also witnessed a stellar 40% year-over-year expansion rate in Q2, higher than growth rates seen in prior quarters.
Guidance Upped
For the full year, the company raised its net revenue guidance from the range of $8.6−$8.8 billion to $8.85−$8.95 billion. This now indicates FX-Neutral growth of 5–6% for 2016, up from 3–5% projected earlier. Also, for the third quarter, the company expects net revenue in the range of $2.16 billion and $2.19 billion, which replicates 6–7% growth.
Should You Play eBay ETFs?
The company’s streamlining initiatives and strategy to spin off the PayPal business (almost a year ago) seems to be bearing fruit. Investors must have been optimistic on the company’s performance going into the earnings release, as the stock was up about 1.9% in the key trading session of July 20. The stock gained over 9.3% in the last three months (as of July 20, 2016) and may see bright trading ahead following an encouraging earnings release.
eBay currently carries a Zacks Rank #3 (Hold) which may change ahead reflecting the earnings results. Investors should note that Internet commerce segment – the industry eBay operates in – is presently in the top 24% allocation of the Zacks Industry Rank. Most importantly, eBay is a good value play at this moment, manifested by a Value score of ‘B’ (read: 5 Mid Cap Value ETFs Are Top Picks Now--Here is Why).
All these point to a moderately bullish long-term outlook. So, investors counting on the long-term potential in the space can consider the recent rally in eBay shares as a start to the wining trend. However, an ETF approach may be better; at least it can cover up one player’s weakness with some other components’ strength.
So, below we highlight a few ETFs with considerable exposure to eBay. These products can see smooth trading ahead (read: Guide to Internet ETFs):
The in-focus eBay occupies the sixth position with a 4.32% allocation. In terms of industrial exposure, Internet software and services make up for 60% of the basket, followed by Internet retail.
First Trust Dow Jones Internet Index ((FDN - Free Report) )
This is one of the most popular and liquid ETFs in the broad technology space. The fund charges 54 bps in fees per year. In total, the fund holds 41 stocks in its basket with the in-focus eBay taking the ninth spot with a 4.17% share. From a sector look, information technology accounts for about 70% of the portfolio while consumer discretionary makes up 20%.
This ETF comprises stocks that are into online retailing. eBay takes the seventh spot in the fund and accounts for about 3.38% of the product (read: June Retail Sales Rejoice: ETFs & Stocks to Bet On).
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eBay Jumps on Q2 Earnings: ETFs to Play
E-commerce giant eBay Inc ((EBAY - Free Report) ) came up with Q2 results after the closing bell on July 20. Overall, the mood was optimistic on in line earnings and a revenue beat, pushing the stock up around 6.9% after hours. There was more from eBay to impress investors as management raised the guidance and the company's board approved an incremental $2.5 billion share repurchase program.
Behind the Headline Numbers
The company posted earnings of $0.36 per share (accounting for stock-based compensation), which was in line with the Zacks consensus estimate. Net revenues of $2.23 billion breezed past the estimate of $2.17 billion and grew 5.7% year over year.
Gross Merchandise value grew 4% year over year in Q2, boosted mainly by the contribution of StubHub. Gross Merchandise value in StubHub grew 35%. eBay's Marketplaces’ segment recorded a 3% jump in GMV.
Net transaction revenues also showed an improving trend in the Marketplace segment declining just 0.2% year over year in the quarter. The rate of decline this time is, however, much lower. StubHub’s net transaction revenues also witnessed a stellar 40% year-over-year expansion rate in Q2, higher than growth rates seen in prior quarters.
Guidance Upped
For the full year, the company raised its net revenue guidance from the range of $8.6−$8.8 billion to $8.85−$8.95 billion. This now indicates FX-Neutral growth of 5–6% for 2016, up from 3–5% projected earlier. Also, for the third quarter, the company expects net revenue in the range of $2.16 billion and $2.19 billion, which replicates 6–7% growth.
Should You Play eBay ETFs?
The company’s streamlining initiatives and strategy to spin off the PayPal business (almost a year ago) seems to be bearing fruit. Investors must have been optimistic on the company’s performance going into the earnings release, as the stock was up about 1.9% in the key trading session of July 20. The stock gained over 9.3% in the last three months (as of July 20, 2016) and may see bright trading ahead following an encouraging earnings release.
eBay currently carries a Zacks Rank #3 (Hold) which may change ahead reflecting the earnings results. Investors should note that Internet commerce segment – the industry eBay operates in – is presently in the top 24% allocation of the Zacks Industry Rank. Most importantly, eBay is a good value play at this moment, manifested by a Value score of ‘B’ (read: 5 Mid Cap Value ETFs Are Top Picks Now--Here is Why).
All these point to a moderately bullish long-term outlook. So, investors counting on the long-term potential in the space can consider the recent rally in eBay shares as a start to the wining trend. However, an ETF approach may be better; at least it can cover up one player’s weakness with some other components’ strength.
So, below we highlight a few ETFs with considerable exposure to eBay. These products can see smooth trading ahead (read: Guide to Internet ETFs):
PowerShares Nasdaq Internet Portfolio (PNQI - Free Report)
This fund gives investors exposure to the broad Internet industry. The fund holds about 86 stocks in its basket while charging 60 bps in fees per year (read: Will These ETFs Stay Afloat as Netflix Sinks on Soft Q2?).
The in-focus eBay occupies the sixth position with a 4.32% allocation. In terms of industrial exposure, Internet software and services make up for 60% of the basket, followed by Internet retail.
First Trust Dow Jones Internet Index ((FDN - Free Report) )
This is one of the most popular and liquid ETFs in the broad technology space. The fund charges 54 bps in fees per year. In total, the fund holds 41 stocks in its basket with the in-focus eBay taking the ninth spot with a 4.17% share. From a sector look, information technology accounts for about 70% of the portfolio while consumer discretionary makes up 20%.
Amplify Online Retail ETF (IBUY - Free Report)
This ETF comprises stocks that are into online retailing. eBay takes the seventh spot in the fund and accounts for about 3.38% of the product (read: June Retail Sales Rejoice: ETFs & Stocks to Bet On).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>