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eBay Investors and Investment Whiplash

By Martin Harris in The Stock Market
June 10th, 2011

eBay’s stock has been vacillating so wildly that all the ups and downs have been giving shocked investors whiplash.

WhiplashOnline auction giant eBay saw it’s stock vacillating wildly once again this week after an upgrade from “sector perform” to “outperform” by Pacific Crest’s Steve Weinstein. Following some aggressive trading, it appears the bulls are looking for more gains in the near future.

Early yesterday, tracking systems recorded a number of buyers in the July 30 calls for $1.50 and $1.52, with about 4,000 total contracts purchased. The June 30 calls were also quite active, with more than 1,400 bought for $0.88 to $1.09.

While volumes were noticeably less than previous positioning, eBay has managed to swat off negative press regarding their failing marketplace and attract some buying of the October 32 calls earlier this month. Calls outnumbered puts by more than 2 to 1 yesterday, which is yet another indicator the consensus remains bullish.

eBay stock closed yesterday (Thursday) up 0.29 percent at $30.66 but closed today (Friday) down 2.28% at $29.96, once again showing a fickle sentiment towards the company that just can’t seem to hold momentum. Despite the positive new stories about Pacific Crest’s upgrade, and the mild upswing in price, the down side flattened out any gains.

Although Pacific Crest said eBay could see more than 30 percent upside from here, citing prospects for its core business and PayPal division, the general consensus is that eBay is just settling down from hitting a 52 week high of $35 per share earlier this year. There are many hidden factors, such as PayPal facing strong competition from emerging rivals and eBay’s marketplace floundering because of increased fees charged to merchants, leading them to look for alternative to selling on eBay.

One thing is certain and that is nobody knows exactly where eBay is headed to but it’s likely to be a wild ride. Whenever a stock vacillates as wildly as eBay has been doing for the last few years, there are bound to be a lot of winners and a lot of losers. It’s enough to give investors whiplash.

eBay is scheduled to announce earnings on July 20, just a few days after the options expire on July 15.


One Response to 'eBay Investors and Investment Whiplash'

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  1. Terry
    posted on June 14th, 2011

    It’s endlessly enjoyable and endlessly profitable (to me) to silently see ebay crashing and burning under $30 again. It’s a wonder the bagholders keep believing, but I believe it’s those Goldman Sachs micro trade computers that keep ebay up anyways, and give us those frequent pump and dumps that are profitable only to them, and savvy short investors that have great timing. With all the bad feelings on the street and in communities in general about ebay and its practices lately, it’s a wonder anyone invests long in ebay junk stock anyways.

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