EBAY Contends With Sour Pre-Earnings Sentiment

Analysts and options players have taken a bearish stance ahead of the event

Digital Content Manager
Nov 2, 2022 at 11:30 AM
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Online bidding giant eBay Inc (NASDAQ:EBAY) is just one in a slew of big names to report earning this week, with its third-quarter results due out after the close this evening, Nov. 2. The equity is sliding ahead of the event, last seen down 0.8% at $39.52. Analysts are expecting profits of 93 cents per share, which is slightly higher than the 90 cents per share the company posted for the third quarter last year. 

Like many equities, EBAY enjoyed an October rally. However, this positive price action was met with rejection at the 50-day moving average -- a trendline that's pressure shares lower several times this year. In 2022, EBAY has shed 40.7%, though it's clinging to a 7.2% quarter-to-date gain. 

ebay nov 2

The stock has a history of sizeable post-earnings drops, and settled lower the day after five of its last eight earnings report. It's biggest next-day dip came after its May 2022 report, when the stock shed 11.7%. Regardless of direction, eBay stock has averaged a 6.2% next-day swing, which is almost half the 11% move the options pits are pricing in this time around. 

A closer look at the options activity surrounding EBAY shows these players have been unusually put-heavy ahead of earnings. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day put/call volume ratio of 2.57, which stands in the 86th percentile of its annual range, indicating a healthy appetite for bearish bets. 

Analysts share this pessimism. Of the 20 in coverage, just five consider EBAY a "strong buy," while the remaining 15 call it a "hold" or worse. Short sellers, however, are jumping ship, with short interest 23.2% lower in the last reporting period. 

 

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