Is eBay Inc (NASDAQ:EBAY) a terrible stock to own? Not necessarily. It has decent growth and a reasonable valuation. But it’s missing a certain “it” factor that other tech companies have right now.
The company’s recent quarterly results, wherein it reported in-line earnings and missed on revenue estimates, only highlights the fact that eBay is missing some mojo. Making matters even worse, second-quarter guidance was below analysts’ estimates and its full-year outlook was disappointing, indicating that the second half wouldn’t make up for a slow start to 2018.
eBay’s stock price hasn’t weathered the storm very well. While shares are roughly flat on the year, eBay stock is down big from its 2018 highs, falling almost 20%. With that in mind, let’s look at three stocks with better prospects for the year.
Amazon vs eBay Stock
Source: Mike Seyfang via Flickr
What better head-to-head comparison for eBay stock than Amazon.com, Inc. (NASDAQ:AMZN), right?
If investors are buying eBay right now, one reason is likely because of its ecommerce potential. It’s certainly not for its exposure to PayPal Holdings Inc (NASDAQ:PYPL), given that eBay already spun that property out. So if investors are looking for e-commerce plays, why stray from the best? In this case, that’s Amazon.
Not only is Amazon the leader when it comes to ecommerce and ecommerce growth, but it’s also a leader in voice-recognition products. Its Alexa products are top-notch and have become a serious revenue generator for AMZN.
Additionally, it embeds the Amazon ecosystem further into consumers’ everyday lives, an important factor when it comes to Prime. Worth noting is that AMZN just raised Prime prices by 20% on its 100 million users.
Talk about stickiness.
Not only does AMZN dominate in all of these areas and have a stock with plenty of momentum, it’s also a dominant player in the cloud. Its Amazon Web Services is a market-share leader and is responsible for accelerating AMZN’s top and bottom line growth.
Nvidia Corporation (NASDAQ:NVDA) vs eBay stock doesn’t seem like a fair matchup because it isn’t. While Nvidia isn’t involved in ecommerce, it has become a huge player in the tech sector, with its products in seemingly every major growth category right now.
You name it: A.I./deep learning applications, autonomous driving, virtual reality, gaming, cloud-computing and datacenter.
It’s the go-to name in these categories and impressively, Nvidia’s growth isn’t slowing down much. That’s highlighted in its recent earnings report, where it hammered expectations. Over the past year, the valuation has come down to a comprehensible level too.
While shares rallied from $220 to $260 in just a few trading sessions ahead of earnings, it did pullback despite great quarterly results. I like that price action and its long-term story looks incredible. Here’s how to trade it now after the pullback.
Aside from buying an iPhone on eBay, the online auction site and Apple Inc (NASDAQ:AAPL) don’t have too much in common. But don’t forget that Apple is leaps and bounds better than its Silicon Valley brethren.
Apple has better earnings growth this year and next year, while its 14% revenue growth for 2018 comes up just shy of the forecast for eBay. Further, Apple has a pretty consistent buyer in its stock, with Warren Buffett now amassing a 5% stake in the company.
If Buffett can’t move Apple stock, the company’s buyback sure can as Apple’s management just approved a $100 billion boost to its share buyback program. Between its current cash holdings and its future cash flow figures, it suggests that another $100 billion buyback isn’t out of the question next year as well.
I believe Apple is heading to a $1 trillion market cap, but it just goes to show how big these buybacks are compared to its market cap. Aside from the iPhone, Apple’s seeing massive growth from its Services business. Revenue for the segment grew 31% year-over-year to $9.2 billion, crushing estimates of just $8.4 billion.
Not to beat up on eBay stock too hard, but consider that full-year estimates call for $11 billion in sales. Apple’s services business almost did that in one quarter! Despite all these points, Apple stock actually has a lower valuation that eBay stock too.
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