Why eBay gained 15% in June

The online auction and e-commerce company is taking multiple steps toward becoming a better focused and more relevant platform.

| More on:
chart showing an increasing share price

Image source: Getty Images

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of eBay (NASDAQ: EBAY) gained 15.3% last month, according to data provided by S&P Global Market Intelligence. The rally, which was spurred by a series of developments, not only unwound a couple of sizable pullbacks the stock suffered earlier in the year, but carried it well into record-high territory.

So what

Don't look for any single catalyst. Rather, a series of bullish headlines all contributed to eBay's strong June performance. That series began with the official announcement that eBay would offer guaranteed authentication of luxury handbags sold via its e-commerce platform. While that's an encouraging development in and of itself, it's also reflective of a more sweeping overhaul at the company that is allowing it to do something that bigger rival Amazon (NASDAQ: AMZN) still struggles to do: offer some guarantees about the quality of products sold by third parties on its platform. Now, ebay.com offers certified refurbished electronics as well as certified refurbished home goods, among others -- and the latter category also launched less than a month ago. Perhaps the biggest driver of eBay's share price boost in June was the ongoing streamlining of the entire company. There was news that regulators will not seek to prevent the sale of eBay's classified ads business to Norway's Adevinta (OB: ADE). Further, the company is selling most of its South Korean business to Shinsegae Group's E-Mart and search engine operator Naver. As is the case with the introduction of authenticated handbags, these planned divestitures reflect a bigger philosophical shift -- in this case, toward a tighter focus on its e-commerce and online auction platform. Finally, though it was announced in May, eBay's foray into the non-fungible token (NFT) market likely contributed to last month's big gain, by virtue of putting the company closer to the center of new sorts of digital consumerism and speculation.

Now what

These moves (and others) are steps in the right direction for the company, which arguably hasn't made the most of how it differs from powerhouse Amazon -- its focus on the sale of one-of-a-kind goods that require custom-crafted listings. But eBay is starting to do a better job of that, and at the same time is shedding business lines and units that aren't adding enough long-term value to the company to justify holding on to them. Considering that context, this e-commerce company is a quality growth stock worth owning. Would-be investors would be wise to exercise patience, however. With June's gains in the books, eBay shares are now up by 165% from last March's low and up by 50% from November's low... and they are showing some profit-taking pressure. Notable pullbacks from rallies have been the norm for a year now, and this rally isn't likely to yield a different result.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended eBay and has recommended the following options: long January 2022 $1,920 calls on Amazon, short January 2022 $1,940 calls on Amazon, and short June 2021 $65 calls on eBay. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News