eBay Stock Looks Toward Record Highs as Earnings Loom

The equity is fresh off a record high

Assistant Editor
Oct 27, 2021 at 1:21 PM
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The shares of eBay Inc (NASDAQ: EBAY) are lower this afternoon, last seen down 1.2% at $77.60, a few hours ahead of the company's third-quarter earnings report, due out after the close today. Below, we will explore some of the options activity surrounding the stock ahead of the event, and look at the e-tailer's performance on the charts of late.

A look at the equity's history of post-earnings reactions during the past two years shows a generally negative response. During its last eight reports, more than half of these next-day sessions were lower, including a 10% drop in April. The security averaged a post-earnings swing of 5.4% during these last eight reports, regardless of direction. This time around, the options market is pricing in a much larger move of 8%. 

On the charts, eBay stock is only a few sessions removed from its all-time high of $81.19. The surge came after an early-October pullback that was captured by the 120-day moving average. EBAY is up 54.5% in 2021.

EBAY Chart October 27

An unwinding of pessimism over in the options pits could fuel additional tailwinds for eBay stock. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.19 sits higher than 77% of readings from the past year, indicating short-term options traders have rarely been more put-biased. 

Similarly, analysts are extremely pessimistic at the moment, meaning an unwinding of this sentiment could put additional wind at EBAY's back. Of the 15 analysts in coverage, 10 recommend a tepid "hold." Plus, the 12-month consensus price target of $74.28 is a 4.3% discount to the stock's current level of trading.

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