eBay Stock on the Rise After Upgrade

The company is close above its 20-day moving average for the first time in a month

Deputy Editor
Apr 6, 2020 at 10:32 AM
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Ebay Inc (NASDAQ: EBAY) is joining in on the broad market rally today, up 4.5% to trade at $30.70 at last check. This comes after Guggenheim upgraded the "increasingly defensive" EBAY stock from "neutral" to "buy," citing the company's valuation and minimal inventory risk.

Since mid-February highs just below $40, Ebay has careened to an annual low on March 23, only to see the subsequent rally halted by its 20-day moving average around $31. Today it looks as though EBAY is on its way to topple that trendline on a closing basis for the first time in a month, though the equity is still down 15% year-to-date.

Analysts are bearish coming into today with 13 lukewarm holds and one "sell" and "strong sell" each out of 23 in coverage. eBay's 12-month consensus target price of $38.34 is a 30.4% premium to current levels. 

Shorts have made a drastic turnaround lately, with short interest up 78.6% in the last two reporting periods. The 47.25 million shares sold short accounts for a healthy 6.2% of the stock's available float, and would take 3.6 days to cover at EBAY's average pace of trading. In other words, there's ample room for a short squeeze to push the stock higher.

It's worth noting that eBay's Schaeffer's Volatility Scorecard (SVS) sits at a low 8, revealing that EBAY's stock has tended to fall beneath traders' volatility expectations during the past year.


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