Today, eBay (EBAY) stock is pushing higher after GameStop (GME) launched an audacious $55.5 billion unsolicited bid to acquire the e-commerce giant.
Following the rally, EBAY sits firmly above its major moving averages (MAs), albeit with an RSI approaching 70, indicating overbought conditions that often signal a pullback ahead.
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Still, there’s reason to believe that eBay shares — already up more than 35% versus their YTD high — have significant further upside from here (with or without GME).
www.barchart.comGameStop Has Valued eBay Stock at a Premium
EBAY has received an unsolicited cash-and-stock offer from GameStop that values its shares at $125 each — signaling another 14% upside from current levels.
Moreover, GME chief executive Ryan Cohen’s plan to cut $2 billion in annual costs suggests eBay has been significantly undervalued and under-optimized as a standalone business.
According to Cohen, as a joint entity, eBay could leverage GameStop’s 1,600 retail locations as authentication hubs for high-value collectibles, addressing one of its biggest hurdles — trust.
In short, investors are loading up on EBAY stock today, hoping the merger will create a new, battle-hardened Amazon (AMZN) competitor.
EBAY Shares Are Attractive Even Without GME
Ryan Cohen will go straight to EBAY shareholders should the company’s board decline his $55.5 billion proposal, he confirmed in a post-announcement interview.
However, even if the GME deal fails, eBay shares remain a compelling proposition for long-term investors.
As famed investor Jim Cramer put it in a recent segment on CNBC, “eBay is much better than it used to be,” praising the firm’s shift away from general merchandise toward high-margin categories like luxury watches, sneakers, and trading cards.
Ritholtz’s chief executive, Josh Brown, is also bullish on eBay stock, which he views as a cash flow machine with a disciplined capital return program (currently pays a 1.14% dividend yield).
Still, at about 4x sales, EBAY trades at a discount to its e-commerce peers despite its asset-light model and robust advertising revenue growth, which recently saw a double-digit uptick.
eBay Remains Buy-Rated Among Wall Street Analysts
Wall Street firms also remain constructive on EBAY shares, believing its commitment to artificial intelligence — including a refined AI-powered search interface — will improve the platform and the shopping experience over time.
The consensus rating on eBay sits at “Moderate Buy” currently, with price targets as high as $132, indicating potential upside of about 20% from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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