EBAY is dropping by nearly 7%, on weak forward guidance by the CEO. The retrenchment is confirmed by very high volume of 37 million shares. This correction was foreshadowed by aggressive insiders selling of 2.1 million shares. Sellers included the Chairman, CEO and CFO. Furthermore large institutions have recently sold 14.7 million shares. The stock’s technical’s are also weakening. The MACD is trending lower. EBAY is now trading below the 20 and 50 day SMA, and is approaching the 200 day SMA. The 5 day EMA is nearing a negative crossover of the 13 day EMA. Absent a positive new catalyst to reverse the correction, the stock could correct to the $ 50.09- $ 50.25 near term support level. The medium and longer term prospects for EBAY are positive, but in the near term the trend is negative. The short term risk adjusted return is biased to the downside into next week.
Listen to yourselves, with your buzzwords and jargon. You people don't have a clue as to what is going on at eBay. The company is in trouble, and pulling out all the stops it can, by way of seller specials (which would not even have been thought of using a few years ago, as it was not necessary). The head honchos are desparately trying to gain any revenue possible. You think because eBay comes up with a snazzy new smartphone app or bullies it's way into a B+M store - THAT makes all of the difference? Get your heads out of the clouds...this stock is a dog, and the only thing it's good for, is $5-$7/share gain every 60 days. It's NEVER going to $60. Never, ever! Not as long as the current CEO has the reins.
EBAY is now correcting for it's fourth consecutive trading day. Each day stock registers lower low's, and lower high's. It is now trading below the 20, 50 and 200 day SMA's, and the 12/26 MACD is trending down and close to breaking below zero. Successively lighter daily volume suggests that a bottom support price is within reach but not yet realized. Absent a broader market pullback, correction should end before the COB Friday, somewhere between $ 50.09 and $ 50.25. An equally important question is what happens after a floor has been established. The next earnings report is several months away, and obvious near term positive catalysts are not evident. Conversely the Mid to Long term the Pay Pal franchise is strong and could sustain stock appreciation even if the value of the " legacy EBAY " business is zero.
EBAY Correction is likely to continue, at least we get through the uncertainty associated with the up-coming Federal Reserve news release on Wednesday, July 31. $ 50.09- $ 50.25. A very large block of open buy orders for 9600 shares @ $ 50 is anticipating a somewhat lower bottom.
Many EBAY sellers/partners are experiencing real pain, and are understandably questioning the business model. While I emphasize with their misfortune, the real value of EBAY is PayPal. PayPal has a footprint far beyond EBAY and is the real growth and profit engine of the company. When the stock reaches it support level, buyers will be investing in PayPal, not the legacy EBAY business.
EBAY and MSFT both missed quarterly reporting estimates, and offered disappointing guidance compared to street expectations. Both are out of favor with the larger institutional investors. MSFT bottomed earlier on 7/19, EBAY's price discovery is still a work in process. The larger tech investors are either diverted by today's AAPL report or are focused on the better perceived prospects of YHOO and GOOG.
I concur that EBAY has begun a price new discovery process that may well challenger the $ 50 low on June 24. This time however the correction is due to a rough patch ahead envisioned by the CEO, as compared to an overall market pullback. At the end of the price discovery EBAY, EBAY's Mid to L/T prospects are favorable. S/T it may be a falling knife. Until this is resolved, caution is advisable.
eBay clearly stated financial guidance for the next year may be off. What do you need to see to know this is a company in trouble? All the trouble is compounded by the current CEO John Donahoe and his executive team. eBay will probably survive but they need to oust the CEO asap to get back on track.
Ebay's challenges today are now compounded by the disappointing results this afternoon from technology stalwarts GOOG and MSFT. This is in addition to the miss @ AXP, portending future weakness at PayPal. After hours, EBAY shares are continuing to decline. The EBAY correction has not yet established a sustainable support level.
That may be true after the stock stabilizes at new sustainable support levels. As I have previously suggested technicals that are under pressure, high but abating confirming volume, a difficult tech environment with notable misses from GOOG and MSFT suggest that the bottom may be in the $ 50.09-$50.25 range. We are likely to know the answer before the end of next week.