Why eBay Inc (NASDAQ:EBAY) Could Be A Buy

Today we're going to take a look at the well-established eBay Inc (NASDAQ:EBAY). The company's stock received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $43.93 at one point, and dropping to the lows of $37.18. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether eBay's current trading price of $37.8 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at eBay’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for eBay

What is eBay worth?

The stock is currently trading at US$37.80 on the share market, which means it is overvalued by 43% compared to my intrinsic value of $26.39. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since eBay’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of eBay look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. In eBay’s case, its revenues over the next few years are expected to grow by 35.64%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in EBAY’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe EBAY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on EBAY for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for EBAY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on eBay. You can find everything you need to know about eBay in the latest infographic research report. If you are no longer interested in eBay, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.