The EBay stock forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary

• I reiterate the April 25, 2019 buy recommendation I made for eBay’s stock. The stock is now trading well above that day’s closing price of $38.52.
• The recent sale of its Classifieds advertising unit should help EBAY deliver my 1-year price target of $70. The 52-week high of EBAY is only $61.06.
• I’m highly confident that the rising cases of COVID-19 infections will strengthen the tailwind for e-commerce sites like eBay. Online shopping is greatly boosted during pandemics.
• Many people who lost jobs due to pandemic-induced lay-offs are selling their possessions on eBay. This should boost eBay’s 2020 revenue.
• The predictive AI of I Know First has a bullish one-year forecast for eBay’s stock. We should take I Know First’s advice.

I won’t mind if you do your profit-taking on eBay (EBAY). This company’s stock is now trading 51% than when it was when I made my April 25, 2019 buy recommendation. No thanks to the global COVID-19 pandemic, EBAY touts a 3-month price return of 55.34%. EBAY can still go higher before 2020 ends because the pandemic is still compelling most people to shop online. It is safer to order food/essentials on eBay than shop at Wal-Mart (WMT).

The recent $9.2 billion sale of its classifieds advertising unit should boost EBAY to my 1-year price target of $70. Based on the chart above, EBAY is now a momentum trading buy opportunity. Investors would appreciate eBay more because it quit the online classifieds advertising business. eBay now has more money to grow its core businesses of e-commerce and online auction.

Why This Development Matters

The classifieds segment sale gave eBay $2.5 billion in cash and 540 million shares (worth $6.7 billion) of Adevinta (OTCPK: ADEVF). eBay now owns 44% of Adevinta. Adevinta is based in Norway and it operates online marketplaces and classifieds in 15 countries. Going forward, the 44% stake in Adevinta means eBay has greatly expanded its e-commerce revenue growth opportunity. Adevinta has a large presence in Spain and Latin America. Going forward, eBay will still share in the $1.06 billion annual revenue of the classifieds business group that it sold to Adevinta. Adevinta will manage the Classified Ads listings on eBay marketplaces. eBay can focus on growing its online auction and e-commerce platforms.

The chart above shows eBay’s future will still depend much on how good it can growth its MarketPlace segment. eBay will probably use the $2.5 billion from Adevinta to help boost its e-commerce business. MarketPlace’s 2019 e-commerce revenue of $8.638 billion is miniscule compared to Amazon’s (AMZN) $141.25 billion.

It’s been a long-term drag that eBay has an unimpressive 5-year revenue growth CAGR of only 9.44%. The 44% stake in Adevinta can help eBay a forward 5-year revenue CAGR of over 11%.  The reason why eBay is relatively undervalued against its e-commerce peers is mainly due to its much lower sales growth performance. Nevertheless, EBAY is still a good value opportunity because of its relative undervaluation.

EBAY has more upside potential because many investors will eventually realize just how cheap it is compared to ETSY or AMZN. I cannot comprehend why ETSY has a TTM Price/Sales valuation of 14.51 while EBAY only has 4.41. This market anomaly will eventually get corrected. Better we go long on EBAY now while it is still undervalued.

The Ongoing Pandemic Is A Strong Tailwind

My bullish sentiment for EBAY is because the COVID-19 pandemic is still surging around the world. Brazil and India now have more than 1 million COVID-19 infections. The United States has almost 3.9 million confirmed COVID-19 victims. The highly-contagious nature of the COVID-19 coronavirus means majority of people will still depend on mobile/online shopping for their daily food/essentials.

More people working and learning from home means there’s a greater need for online purchases. eBay Philippines now sells food, beverages, medicine/food supplements, and other daily consumables. No thanks to COVID-19, I expect eBay to finish 2020 with $11.2 billion (or higher) in annual sales.

The other trend that is increasing the e-commerce transactions on eBay is that laid-off people are now auctioning/selling their possessions. There’s competition from pawnshops and Facebook’s (FB) buy & sell groups. However, eBay is still the safer place for people to auction or sell their used gadgets, cars, houses, collectibles, jewelries, furniture, and other things of value.

The increased usage of eBay’s Marketplace will also lead to better profitability. A better than expected 2020 EPS should entice investors to give EBAY a higher stock valuation. I believe eBay’s invidious status as the no. 1 place for online auctions should at least give it a forward GAAP P/E valuation of 26x.

Conclusion

EBAY is a strong buy. I expect it to trade near or above $70 within the next 12 months. Selling the digital classified ads business will let eBay finance a more efficient online auction and e-commerce platform. The $2.5 billion could be used to invest more in cloud computing and artificial intelligence. AI can do a lot in improving the online/mobile shopping experience of eBay’s customers.

Some of that $2.5 billion could also be used to improve the delivery and logistics of eBay. More people will shop on eBay if management can offer cheaper shipping fees and faster delivery time.

Lastly, you should go long on eBay because the predictive AI of I Know First has a bullish one-year forecast for its stock. A stock only needs to score 100 to get a clear buy signal. EBAY received a one-year forecast score of $131.6 from I Know First. The AI algorithm of I Know First understood that online retail leaders like EBAY has better growth potential (and profitability) because of this ongoing pandemic.

Past I Know First EBAY Stock Forecast Success

I Know First was successful with EBAY stock forecast. On April 25, 2019, the I Know First algorithm issued a bullish 1-year EBAY stock forecast and the algorithm successfully forecasted the movement of the EBAY stock.  After 1 year, EBAY shares rose by 2.15% as the period covers the COVID-19 crisis. See chart below.

Here at I Know First, our quantitative trading AI have modeled and provided EBAY stock forecast for short-term and long-term time horizons, ranging from 3 days to a year. We provide forecasts for institutional clients, as well as private investors to identify the best investment opportunities for both long-term trading and swing trading strategies. We have various packages of machine learning stock prediction, such as aggressive stocks, top tech stocks as well as Forex forecasting, and Apple stock news. Today, we are producing forecasts for over 10,500 assets, including commodity forecasts and gold predictions.

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Please note-for trading decisions use the most recent forecast