Tag: eBay Inc. (EBAY)

eBay’s Revenue Boost: Will Dropping AmEx Lead to Lower Costs & Higher Margins?

Posted on by The INO.com Team

Imagine logging into eBay, excited to use your American Express card to grab that coveted item, only to find out eBay no longer accepts AmEx. This scenario became a reality on August 17, 2024, when eBay Inc. (EBAY) officially stopped accepting American Express Company’s (AXP) credit cards due to what they call “unacceptably high” processing fees.

eBay made this move after months of criticism over rising credit card transaction fees. According to eBay, despite technological advancements and increased investment in fraud protection, fees for processing transactions have only increased. They argue that this trend is due to a lack of competition among credit card issuers, which keeps costs high. This decision was made public over two months ago, giving users time to prepare for the switch.

With $10.11 billion in revenue last year, EBAY is pushing for stricter regulations to encourage competition and “help reduce transaction processing costs for merchants and their customers.” Credit card processing, or swipe fees, are what businesses pay every time a customer uses a card. These fees can range from just over 2% of each transaction to as high as 4% for premium cards. These fees are among the highest operating costs for businesses, often leading to higher consumer prices and reduced sales.

American Express is known for its high fees, which is why eBay decided to cut ties. EBAY’s decision came after negotiations between the two companies broke down. Despite the move, AXP downplayed the impact, stating that “eBay represents less than 0.2%” of its total network volume. They expressed disappointment but insisted that eBay’s decision limits customer payment options and “take away the service, security, and rewards that customers value when paying with American Express.”.

Is It a Big Hit to Either Company?

Surprisingly, while EBAY and AXP part ways, Amex isn’t too worried. The company’s fiscal 2024 first quarter report revealed that over 60% of new account openings came from Millennials and Gen Z, two demographics they’re keen to keep growing. But the big question is, are these youngsters spending their money on eBay?

Last month, eBay adjusted its sales forecast to $2.50-$2.56 billion, compared to $2.57 billion recorded in the second quarter (ended June 30, 2024), hinting that sales might be slipping. However, the company’s stock has been on an upward trend this year. EBAY shares have gained more than 35% year-to-date and nearly 12% over the past three months.

According to eBay, most customers are “willing to use alternative payment options,” like Visa, Mastercard, and Discover. So, while ditching Amex might be inconvenient for some, most eBay shoppers are likely to switch to another payment method without much fuss.

Despite inconsistent consumer spending, the company managed to squeeze out profits with a 1.2% year-over-year increase in its net revenue of $2.57 billion. It wasn’t a huge leap, but it was enough to exceed analyst expectations of $2.53 billion. Its gross merchandise volume (GMV) also inched up by just 1% from the prior year to $18.42 billion. In the earnings release, eBay cited “an uneven discretionary demand environment in our major markets” as a reason for the sluggish figures.

On the bottom line, EBAY reported a non-GAAP net income of $602 million and $1.18 per share, up 8.5% and 14.6% year-over-year, respectively. It also surpassed the consensus EPS estimate of $1.12 per share, which is impressive.

Analysts seem to expect this trend of modest revenue growth and stronger earnings to continue. They anticipate EBAY’s full-year revenue to increase by just 1.9% year-over-year to $10.31 billion. However, its earnings per share is forecasted to grow by 13.5% this year to $4.81 and 7% in 2025 to $5.14.

Could This Be a Tipping Point for Amex?

Amex has been riding high in 2024, but eBay’s decision to cut ties with the credit card giant could be a sign of a broader shift. That raises the question: Will other companies follow suit, or is this just a one-time loss?

For large retailers, credit card processing fees are significant, typically ranging from 1.5% to 3.5% per transaction. These fees quickly add up, turning into billions in profit for credit card companies each year. Amex, however, tends to charge about 1% more per transaction compared to competitors like Visa, Mastercard, or Discover. Because of this, some local businesses and select merchants have stopped accepting Amex cards altogether. That’s a bummer for loyal Amex users.

Shares of AXP took a hit recently after Bank of America Securities analysts raised concerns that the stock might be overvalued, with limited room for further growth. The investment firm downgraded Amex from a “Buy” to a “Neutral” rating, maintaining a price target of $263 per share, signaling caution about the company’s future potential.

eBay’s Cost-Saving Strategy in a Volatile Market

As the Federal Reserve considers lowering interchange fees, eBay’s decision to drop American Express highlights a broader effort to reduce costs amid economic uncertainties. With inconsistent consumer spending and inflationary pressures, particularly in markets like the U.K. and Germany, eBay is strategically reducing costs to bolster profitability.

By cutting high transaction fees, eBay could reduce overhead and better position itself in the fiercely competitive eCommerce market. While the initial reaction might include some pushback from loyal Amex users, the long-term impact on EBAY’s marketplace could be decidedly positive. As the payments landscape continues to evolve, this decision may signal the start of broader changes designed to create a more competitive, cost-effective, and user-friendly environment for both consumers and merchants.

 

 

DASH in, EBAY out - a Deep Dive Into the 2024 Implications

Posted on by The INO.com Team

Following the conclusion of the Consumer Price Index report and the Federal Reserve meeting, we are approaching the last major “liquidity event” of the year: the annual reconstitution of the Nasdaq 100 Index.

In the latest annual reconstitution of the index, floundering e-commerce giant eBay Inc. (EBAY) has seen its spot given to the thriving food delivery service DoorDash, Inc. (DASH). The respective removal and addition will take effect before the commencement of trading on December 18, 2023.

Inclusion within the Nasdaq-100 Index is significant for stocks as it is a reference point for numerous financial products, encompassing options, futures, and funds. Portfolio managers, maintaining portfolios synced with the index, purchase shares in the same proportion included in the index. The addition of stocks is dictated by market capitalization and trade volume. The removal indicates a shift in favor of other companies that met these criteria more closely.

The annual reconstitution aligns with another significant trading occurrence known as triple witching, a quarterly phenomenon marking the expiration of stock options, index options, and futures.

This period provides an invaluable opportunity for the trading community to transfer substantial stock quantities during the final burst of tax loss harvesting or strategically position themselves for the coming year. There will typically be a 30%-40% decrease in trading volume in the year's last two weeks post-triple witching, with noteworthy volume largely limited to the final trading day.

While all this may seem of mere scholarly curiosity, the recent surge in passive index investing over the past two decades has heightened the importance of these events to investors.

Adjustments to these indexes, whether through additions or deletions, share count alterations, or changes in weightings to lower the dominance of large companies, initiate substantial monetary transfers into and out of mutual funds and ETFs directly or indirectly associated with these indexes.

Invesco QQQ Trust (QQQ) is emblematic of these changes due to its strategic linking with the Nasdaq-100, which lists the 100 largest nonfinancial companies on the Nasdaq. The QQQ fund ranks as the fifth-largest ETF, overseeing approximately $220 billion in managed assets.

Given this backdrop, let’s delve into an in-depth analysis of DASH and EBAY stocks and find out what’s in store for them in 2024.

DoorDash, Inc. (DASH)

DASH, a prominent American food delivery provider, has recently garnered attention for various developments attracting investor interest. A key factor is a surge in the company's share value following an impressive earnings report, largely fueled by its deliberate extension beyond customary restaurant delivery services.

The ongoing favorable momentum has been additionally strengthened by the release that DASH is set to feature on the Nasdaq-100 Index. This indicates the company’s burgeoning prominence and fortifying position within the industry.

In the fiscal third quarter that ended September 30, 2023, the company reported a surge in revenues by 27.2% year-over-year to a whopping $2.16 billion, surpassing the consensus mark.

This considerable growth is attributed to the robust performance across total orders and Marketplace GOV, along with refined logistics efficiency and growing advertising contributions. Total orders increased 23.7% year-over-year to 543 million, while Marketplace GOV increased 23.8% from the year-ago quarter to $16.75 billion.

Looking forward to the fiscal fourth quarter ending December 2023, the company projects its Marketplace GOV to range between $17 billion and $17.4 billion. Meanwhile, the adjusted EBITDA is expected to stand between $320 million and $380 million. It is noteworthy that DASH plans significant, ongoing investments in the future as it seeks to broaden its service offerings.

After these results, DASH shares saw a rise of over 7.5% during after-hours trading, signaling investor confidence. The post-earnings rally of DASH shares bears testament to the company's financial wellness and effective strategies to diversify its revenue sources. Its deliberate shift beyond restaurants to include delivery services for groceries, alcohol, and other items has appealed to its consumer base, attracting investors along the way.

The exceeding market expectations with its earnings report indicates that the company's growth strategies produce measurable outcomes crucial to maintaining long-term investor trust.

For the fiscal fourth quarter ending December 2023, analysts anticipate its revenue to increase 24.1% year-over-year to $2.26 billion, while EPS is expected to come at $0.55.

In a rare and strategically significant decision, the firm transitioned from the NYSE to the Nasdaq in September 2023, signifying its positioning and businesses centered on innovative technology. DASH’s CFO Ravi Inukonda said, “We are delighted to join a community of leading technology companies with our transfer to Nasdaq.”

This momentous shift, further strengthened by the company's recent inclusion in the Nasdaq 100, has the potential to amplify investor trust, possibly driving increased market capitalization in forthcoming years.

The Nasdaq-100 Index, encompassing some of the most prodigious and influential entities within the technology and innovation domains, has recently acknowledged DASH's escalating prominence via its inclusion.

This inclusion is traditionally followed by a surge in the demand for the company's shares, initiated by funds tethered to the Nasdaq-100 that are now obliged to purchase stock in DASH. Historical examples corroborate the potential for such inclusion, triggering an upswing in stock prices.

This development also endorses the recognition of DASH for its stellar scalability, incessant innovation, and adeptness at market adaptation – qualities seen as ideal for corporations represented in the technology-centric benchmark. It simultaneously alludes to a transformation in market dynamics and the arrangement of the tech industry, where DASH’s operating model aligns better with extant and prospective market trajectories.

From the investors’ perspective, such an inclusion might be interpreted as a portent of persistent growth, inciting a reevaluation of their investment portfolios. The acknowledgment from Nasdaq will likely draw a more diversified range of investors, like institutional investors, potentially augmenting liquidity and raising visibility for DASH shares.

However, investors should be aware of the stark competition and the intrinsic risks inherent to the rapidly evolving delivery market, characteristic features of which comprise regulatory hurdles and the compulsory need for uninterrupted innovation.

eBay Inc. (EBAY)

EBAY is grappling with intensified competition from e-commerce contemporaries and macroeconomic hurdles. In the fiscal third quarter that ended September 30, 2023, its profit was $1.03 per share, and sales stood at $2.50 billion, aligning with analyst estimates.

Gross merchandise volume, the value of all goods sold on EBAY, increased 1.6% to $17.99 billion in the quarter, surpassing analysts’ average estimates of $17.72 billion. The company reported 132 million active buyers in the quarter, down 2.2% year-over-year. Its advertising revenue of $366 million fell short of analysts’ estimates.

EBAY's recent sales forecast for the upcoming holiday period has dispirited investors. Revenues for the current quarter are anticipated to be between $2.47 billion and $2.53 billion. Even though the figure seems healthy, it falls below the industry analysts' average projections of $2.60 billion. The company expects EPS between $1 and $1.05 in the quarter ending in December, below the analysts’ $1.05 estimate.

EBAY's gloomy revenue outlook for the traditionally profitable holiday season implies persisting struggles in maintaining customer loyalty against fierce rivalry from larger competitors. Projected U.S. online sales are expected to swell by 4.8% during the holiday period of November 1 to December 31. However, EBAY faces a steep climb in attracting consumers. To confront these obstacles, the organization intends to heighten its cost-efficiency to preserve profit margins and earnings.

The unexpected forecast shocked the financial arena, particularly unnerving EBAY investors. Following the disclosure, EBAY’s shares plummeted significantly, highlighting the extensive expectations investors harbor for the company owing to its dominant e-commerce standing.

For the fiscal fourth quarter ending December 2023, analysts anticipate its revenue to decrease marginally year-over-year to $2.51 billion, while EPS is expected to decline 4.2% year-over-year to $1.02.

Additionally, EBAY's exclusion from the Nasdaq-100 Index indicates its diminishing influence and an uncertain long-term business outlook. The removal might weigh the company's stock price, leading to diminished appeal and demand among investors who actively follow or invest in the index. Concurrently, index funds mirroring the Nasdaq-100 could divest their EBAY shares in favor of newly added stocks, thereby increasing selling pressure on EBAY.

The removal could reflect diminished market confidence in EBAY’s performance and growth trajectory, particularly when benchmarked against its e-commerce competitors.

However, this shift also presents EBAY with a unique opportunity for introspection and strategic reassessment. To secure its industry competitiveness, it becomes imperative for the company to acclimate to evolving market dynamics and align itself with investor anticipations.

Despite these potential impacts, the actual effect of this reconstitution might not be significantly detrimental or enduring, as EBAY’s infrastructural foundations and market positioning do not stand directly compromised by the reordering.

In addition, EBAY could potentially harness certain favorable factors to its advantage. These include an uptick in retail activity during the holiday season, the broadening reach of its managed payment service, and robust growth within its classifieds and advertising segments.

7 Historically High Performing Thanksgiving Stocks

Posted on by The INO.com Team

Amid mounting global challenges, it's essential to savor the lighter aspects of life. History shows a bullish trend during the holiday-shortened Thanksgiving week, fueled by increased consumer spending, the surge in holiday travel, and a lower cost of Thanksgiving spread.

Retailers anticipate robust sales during the festive week to turn over a profit for the year. Consequently, they offer discounts and attractive deals on overstocked items, seasonal goods, high-priced commodities, and holiday decor and gifts. Over the past decade, the retail sector has consistently surpassed the S&P 500 during this time frame.

2023 is predicted to witness a record-breaking holiday expenditure during November and December, indicating growth between 3% and 4% over 2022, snowballing the total spent from $957.3 billion to an estimated $966.6 billion. A 2023 Deloitte holiday survey suggests consumers are projected to spend an average of $1,652 during this holiday season, exceeding the pre-pandemic spending levels.

Despite witnessing a dip in October – its first in seven months – U.S. retail sales are expected to rebound. Despite economic uncertainties pressurizing customers, they prioritize holiday expenses during this year's shopping season and are looking for attractive deals and promotions to guide their expenditures.

Approximately 90% of shoppers planning to shop during the Thanksgiving break aim to visit a store to make purchases or collect an online order, with 84% planning to shop online.

Auto manufacturers were grappling amid the United Auto Workers strike. After successful negotiations with General Motors, October 30, 2023 marked the end of the strike. Kelley Blue Book reports that many car dealerships hoarding new vehicles due to fears of scarcity are currently dealing with an oversupply. The average dealership now boasts a 67-day supply of vehicles, although certain brands are still coping with undersupply. The swing in supply could generate lucrative deals for the holiday season.

The airline industry is bracing for the imminent holiday season, expecting record passenger volumes. The Transportation Security Administration projects a staggering 30 million passengers to be screened, potentially setting a new travel record. The pinnacle of this busy stretch is expected to be the Sunday following Thanksgiving, with approximately 2.9 million air travelers anticipated.

According to the Federal Aviation Administration, Thanksgiving flights could peak at 49,606 on the preceding Wednesday – a significant rise compared to last year's all-time high of 48,192. Many airlines are adequately prepared for severe weather conditions, having learned lessons from the previous year when they were compelled to cancel thousands of flights across the country due to adverse weather.

Thanksgiving continues to defy economic headwinds like rising inflation and dwindling consumer savings. Understanding the holiday's implications goes beyond recognizing it as a time for feasting and expressing gratitude; it is also crucial to comprehend its effects on stock market trends.

In the weeks leading up to Thanksgiving, the stock market traditionally experiences more substantial activity as traders recalibrate their strategies. Historically, the S&P 500 has closed the week on an optimistic note three-quarters of the time since 1961, with a median gain of 0.3%.

Furthermore, the S&P 500 has posted positive figures for the week two-thirds of the time, presenting investors with a median gain of 0.75%. Notably, amid the 2008 Global Financial Crisis, the S&P 500 reported an impressive 12% profit during Thanksgiving week.

This article will delve into the influence of Thanksgiving on various sectors like food, beverage, auto, e-commerce, and travel stocks. The seven stocks that could benefit from the holiday week are discussed below:

Amazon.com, Inc. (AMZN)

E-commerce behemoth AMZN is primed to reshuffle the deck of the festive commerce landscape. With a soaring 71.3% year-to-date gain, the company's performance deserves praise. The most recent earnings report depicts an impressive 12.6% revenue surge, hitting a staggering $143.08 billion. AMZN's efforts have been focused on more than just following the market trend, but indeed establishing it.

Market murmurs reflect the awe inspired by the company. Its impressive market cap exceeding $1.48 trillion, coupled with an energetic average volume of 52.49 million, reveals the momentum of AMZN this Thanksgiving.

In a period blossoming with high consumer activity, hundreds of millions of goods are purchased from AMZN. Thus, the company’s fourth-quarter results will provide Wall Street with a comprehensive snapshot of the festive shopping season.

Analysts expect AMZN’s revenue to increase 11.2% year-over-year to $165.85 billion, while EPS is expected to be $0.76, up significantly year-over-year.

Monster Beverage Corporation (MNST)

The Corona, California-based energy drink provider MNST maintains a consistent demand for its beverages, unfazed by frequent price uplifts. The third quarter’s profit surpassed expectations, catalyzed by increased energy drinks and hard seltzers prices.

A decrease in freight and aluminum can costs from the peaks experienced during COVID-19 has inadvertently facilitated the elevation of previously pressured margins.

As of May 2022, MNST beverages have reached the list of top-selling energy drinks in America. The company's momentum will likely persist as a dynamic array of product launches is forecasted to encourage stable growth. A profound distribution network across international markets and a focus on expanding opportunities bode well for future gains.

Bolstered by robust demand trends, sound pricing strategies, and continuous product development, MNST's resilience stands firm. Net sales for the 2023 third quarter increased 14.3% to $1.86 billion. Analysts expect MNST’s revenue and EPS to increase 16.3% and 36% year-over-year to $1.76 billion and $0.39, respectively.

General Motors Company (GM)

2023 is shaping to be a benchmark year for car consumers seeking year-end deals. An unprecedented converging scenario involving elevated inventory levels, significantly increasing interest rates, and traditional holiday discounts is navigating toward big discounts.

Annually, the holiday season witnesses an eruption of optimum offers from car dealerships. Conscious that consumers are more inclined to spend during the festive season, automakers and dealerships deliver enthralling promotions, markdowns, and exclusive deals.

Consequently, after years of observing these seasonal conventions, buyers expect bountiful year-end car discounts, often holding back on purchases until December to avail of them.

For November, GM offers notable cash rebates on various 2023 models. Buyers can expect up to $4,000 off the GMC Sierra 1500 and $3,500 off the Silverado 1500. On average, a rebate of around $1,500 is currently on offer across all GM models.

This tactic could pivotally steer the Detroit-based auto giant's fortunes upward as we enter the holiday season. Amid these developments, for the fiscal quarter ending December 2023, analysts expect GM’s revenue and EPS to be $39.58 billion and $0.97, respectively.

Delta Air Lines, Inc. (DAL)

As Americans traverse the nation to unite with their families during the Thanksgiving season, the holiday is anticipated to act as a definitive marker for the aviation industry's capacity to navigate the year-end festivity period despite facing hurdles of sustained deficit of air traffic controllers.

DAL, bolstered by its strong position, is primed to capture a sizable share of this travel surge. Boasting one of the most comprehensive domestic route networks within the continental U.S., DAL is optimally set up to accommodate these customers.

Being one of the four major carriers dominating over 60% of the U.S. aviation market, DAL persistently demonstrates robust bookings – a trend spearheaded by its premium offerings, which significantly eclipsed the main cabin reservations in recent quarters. Catering to premium passengers has successfully insulated DAL from some of the financial strains budget airlines have faced recently.

DAL projects to witness between 6.2 million to 6.4 million passengers this Thanksgiving, an increase of 5.7 million passengers the airline accommodated last year and is anticipated to surpass the 6.25 million passengers transported in 2019.

DAL emerges as a promising prospect for investors weighted towards capitalizing on dwindling oil prices and the future supply chain improvement. These factors stand to positively impact profit margins within the aerospace industry down the line.

For the fiscal quarter ending December 2023, analysts expect DAL’s revenue is expected to increase 3.9% year-over-year to $13.96 billion, while EPS is expected to be $1.14.

eBay Inc. (EBAY)

With over $20 billion in market cap, EBAY, an established e-commerce heavyweight, is tirelessly striving to attract its consumers' interest and spending power. Customers seeking automotive necessities, smartwatches, and Apple products can reap the benefits of up to 75% discount by commencing their shopping endeavors with EBAY this holiday season.

EBAY constantly refines its strategies to uphold its preeminence in an industry characterized by relentless evolution and revolution. As the holiday season looms, its performance is under intense scrutiny as never before, making its sales forecast a widely watched indicator in the e-commerce landscape.

For the fiscal quarter ending December 2023, analysts expect EBAY’s revenue and EPS to be $2.51 billion and $1.02, respectively.

Conagra Brands, Inc. (CAG)

CAG, a leading North American food company, stands to gain as the anticipated cost of this year's Thanksgiving meal is set to decrease.

American Farm Bureau Federation survey has revealed that the average expense of a conventional Thanksgiving dinner for 10 people in 2023 will be roughly $61.17, or under $6.20 per individual. This reduction is largely attributed to a 5.6% year-over-year decrease in turkey prices and notable reductions in the whipping cream and cranberries prices by 22.8% and 18.3%, respectively.

The declining grocery costs could lead to a sales uptick for CAG this festive season.

Moreover, preparing a Thanksgiving dinner also encompasses multiple stressors, including shopping, planning, and the actual cooking process. However, CAG's sophisticated meal-kit delivery service can eliminate two primary pressure points.

By delivering all the necessary pre-portioned and prepared ingredients required to prepare a mouthwatering meal directly to the customer's doorstep, CAG offers a solution for consumers to enjoy a stress-free holiday season.

For the fiscal quarter ending November 2023, analysts expect CAG’s revenue and EPS to be $3.25 billion and $0.68, respectively.

United Airlines Holdings, Inc. (UAL)

UAL anticipates a record-breaking surge in travelers this Thanksgiving holiday season, projecting significant revenue growth. The holiday travel period, defined as November 17 to November 29, sees the airline expecting to serve over 5.9 million passengers. This indicates a roughly 5% rise compared to 2019 and a significant 13% increment from last year's figures.

UAL plans to operate an average of over 3,900 daily flights to manage the increased traffic, translating to approximately three departures per minute. Therefore, the airline has introduced over 550,000 seats to accommodate high passenger volumes.

UAL attributes its heightened demand to the success of its basic economy pricing option. This economical ticket option allows UAL to compete effectively against rival ultra-low-cost carriers.

UAL’s third-quarter revenue from its basic economy rose 50% annually. UAL’s CEO Scott Kirby credits this substantial gain to the company’s “improved product.”

For the fiscal quarter ending December 2023, analysts expect UAL’s revenue is expected to increase 9.5% year-over-year to $13.58 billion, while EPS is expected to be $1.69.

4 Stocks to Buy Before Black Friday 2023

Posted on by The INO.com Team

Black Friday, a renowned shopping holiday, is rapidly gaining popularity worldwide. The fervor surfaces like clockwork every year. The event signals the onset of the festive retail period, where vendors entice consumers with considerable discounts and appealing deals on merchandise.

Consumers’ scramble for long-desired products is typically the culmination of months of intense preparation undertaken by retailers, warehouse supervisors, and distribution center managers.

Financial analysts conventionally consider the sales returns on Black Friday to outline prevailing consumer confidence. For retail entities, Black Friday has consistently offered an immense financial uplift. Many consumers leverage the occasion to fulfill their Christmas shopping needs at competitive prices.

With persistent escalations in living costs pressurizing household budgets, 74% of consumers intend to exploit the November sales extravaganza in 2023. The National Retail Federation forecasts that holiday spending will increase annually by 3% to 4%. This year's total festive spending is anticipated to range between $957.3 billion and $966.6 billion.

Black Friday is transitioning from physical store-bound activity to being predominantly digital. In 2022, 69% of Black Friday shopping occurred online, as consumers splurged a record-breaking $9.2 billion, according to data from Adobe Analytics. Furthermore, logistical operations for this retail marathon require meticulous strategizing by retail managers, leading to millions in annual outlay.

As digital transactions encroach on the week-long event, it carries notable implications for delivery logistics. Notably, while retailers profit from the holiday season, package delivery services also stand to reap considerable benefits.

Considering this backdrop, it is pertinent to examine why United Parcel Service, Inc. (UPS), FedEx Corporation (FDX), eBay Inc. (EBAY), and Best Buy Co., Inc. (BBY) could be solid investments this festive season.

United Parcel Service, Inc. (UPS)

With a market cap of over $121 billion, UPS is a logistics behemoth that offers various integrated solutions for customers scattered across more than 200 locations worldwide.

Despite its significant standing, the company has been grappling with an assortment of challenges throughout this year. These range from a weakening demand due to economic slowdown to expensive, drawn-out labor contract negotiations, all translating into a forecasted decline in the company’s revenue and earnings for the current fiscal year.

The protracted labor talks significantly distorted UPS' earnings during the year. The resulting five-year contract led to a whopping $500 million upfront expenses in the third quarter alone. At the same time, the extended negotiations caused many customers to switch their deliveries to other networks.

However, opportunities abound as the Black Friday holiday season approaches for UPS to turn the tide. This retail extravaganza provides ample scope for UPS to augment its revenue, attract fresh clientele, and retain its existing customer base, courtesy of its high-quality service offerings.

UPS is improving the underlying quality of its business. This is most easily seen in two areas relating to its revenue. The first is the conscious decision to be more selective over deliveries rather than chasing volume growth. Second is that UPS has made great strides in expanding its connections with small and medium-sized businesses (SMB) and healthcare customers, and it's been able to significantly grow its revenue per piece in recent years.

Moreover, the company's noteworthy 4.7% dividend yield appeals to a broad swathe of income-oriented investors, and value investors also find favor given its appealing valuation metrics. The firm's below-industry non-GAAP P/E ratio presents a lucrative buying opportunity for investors.

Over the past year, the stock has lost roughly 20% and trails behind the 50, 100, and 200-day moving averages. However, Wall Street analysts forecast the stock to reach $168.30 in the next 12 months, indicating a potential upside of 17.6%. The price target ranges from a low of $100 to a high of $202.

FedEx Corporation (FDX)

The shipping and logistics company FDX, with a market cap of over $63 billion, is poised to reap significant benefits from the upcoming Black Friday sales. In anticipation of heightened online shopping activity during this period, increased demand for shipping services allows the company to expand its customer reach and deepen its market penetration.

Its potential to attract consumers by offering holiday promotional discounts on its services could significantly drive its revenue growth and expand its market share. The company's decision to partner with retailers for shipping services further bolsters the potential for enhanced revenues during this season of heightened consumer spending.

Additional services provided by FDX, including gift wrapping, package tracking and insurance, could further distinguish it in a competitive marketplace, attracting additional consumers during the holiday season.

Furthermore, FDX's effective cost-reduction strategies have successfully strengthened its financial standing. Outperforming Wall Street predictions, the international courier company reported impressive fiscal first-quarter adjusted earnings of $4.55 per share.

This robust financial performance led the company's management to elevate its future financial outlook. FDX shares gained momentum after the Memphis-based firm announced adjusted earnings expectations for fiscal 2024, projecting $17 to $18.50 per share.

The company also expects capital expenditure to reach $5.7 billion, with investment priorities geared towards improving efficiency through fleet and facility modernization, network optimization, and automation strategies.

Driven to implement transformative initiatives enhancing efficiency and reducing expenses, FDX anticipates building upon current momentum to improve profit margins and returns throughout the fiscal year. The stage is set for another year of exceptional profitability for FDX, with shares currently trading at a reasonable valuation.

Over the past year, the stock has gained roughly 45% and trades above the 200-day moving average of $237.12. However, Wall Street analysts forecast the stock to reach $297.85 in the next 12 months, indicating a potential upside of 17.2%. The price target ranges from a low of $265 to a high of $330.

eBay Inc. (EBAY)

With over $20 billion in market cap, EBAY, an established e-commerce heavyweight, is tirelessly striving to attract its consumers' interest and spending power. The company initiated the publication of its discount coupons on November 6.

Customers seeking automotive necessities, smartwatches, and Apple products can reap the benefits of up to 75% discount by commencing their shopping endeavors with EBAY this holiday season.

The company recently expanded access to its Generative AI technology, an innovative system designed to upgrade the listing experience for sellers, which is now available to mobile users in the United States, the United Kingdom, and Germany, and 50% of desktop users in these regions.

However, EBAY's recent sales forecast for the upcoming holiday period has somewhat dispirited investors. Expected revenues for the current quarter are anticipated to total between $2.47 billion and $2.53 billion, which, while robust, fall below the industry analysts' average projections of $2.60 billion.

Its bleak revenue predictions for the historically lucrative holiday quarter indicate continued difficulties in retaining customers amid fierce competition from larger competitors. Despite U.S. online sales being projected to increase by 4.8% during the holiday season spanning November 1 to December 31, EBAY faces an uphill battle to attract traffic. To weather these challenges, the company plans to enhance its cost efficiencies to safeguard profit margins and earnings.

The unexpected forecast emanated shockwaves throughout the financial sector, particularly unsettling EBAY investors. Post-announcement, the company's shares suffered a significant plunge, underscoring the heavy expectations investors attach to EBAY due to its commanding position in the e-commerce market.

Over the past year, the stock has lost over 12% and trades below its 50-, 100-, and 200-day moving averages. However, Wall Street analysts forecast the stock to reach $44.75 in the next 12 months, indicating a potential upside of 11.6%. The price target ranges from a low of $32 to a high of $56.

EBAY constantly refines its strategies to uphold its preeminence in an industry characterized by relentless evolution and revolution. As the holiday season looms, its performance is under intense scrutiny as never before, making its sales forecast a widely watched indicator in the e-commerce landscape.

Best Buy Co., Inc. (BBY)

BBY, with over $14 billion market cap, is a specialty consumer electronics retailer that introduces various promotional events via its recently inaugurated Holiday Gift Center – offering unique exploration and immersive discovery experiences of cutting-edge technologies for its clientele. BBY members can anticipate exclusive savings throughout the holiday period. The company will depend on its My Best Buy membership benefits to boost this year's holiday sales.

Interestingly, BBY finds itself in a unique situation this festive season as it battles to maintain market share during a time frame it typically dominates. The retailer has tempered expectations for a highly successful holiday season, which usually accounts for a significant proportion of its profit margins.

While BBY has a low non-GAAP P/E of 10.30x, its dividend yield of 5.74% remains low for various reasons. As of July 29, 2023, BBY has $8.43 billion in current liabilities and $8.30 billion in current assets. Of its current assets, $5.65 billion in merchandise inventories highly depends on consumer spending patterns.

The company’s vulnerability can be illustrated further by its lower than 1x current ratio. Given the upcoming debt maturity, the company’s fortunes largely hang on the successful sale of inventory to maintain its dividend.

This year’s holiday season provides a moment for BBY's modern retail business model – which largely thrived during the pandemic – to prove its resilience. The Richfield, Minnesota-based firm continues to concentrate on enhancing its digital capabilities, such as augmenting its omnichannel services. Its consultation service, supporting customers' personalized tech requirements, has grown in popularity.

In the second quarter that ended July 29, 2023, digital sales comprised 31% of our domestic revenue, consistent with the year-ago quarter and nearly twice as high as the domestic revenue percentage in the pre-pandemic second quarter of fiscal 2020.

Although the BBY stock has declined over 10% over the past year and is trading beneath the 100-day and 200-day moving averages, Wall Street analysts remain optimistic. They forecast the stock to reach $78.60 in the next 12 months, indicating a potential upside of 18.2%. The price target ranges from a low of $60 to a high of $110.

Even though it is perceived as a risky stock with slim margins and limited appeal to investors, BBY is determined to convince potential investors that its forward-looking strategies, industry reshaping efforts, and focus on advancing in-store experiences and robust pickup/delivery operations mark it as a worthwhile investment prospect. Hence, it could be best added to the watchlist.

Is eBay (EBAY) the Hottest Buy Ahead of Its New Acquisition?

Posted on by The INO.com Team

Global commerce company eBay Inc. (EBAY) was founded in 1995 as an auction site. Since then, the company has grown into a major online marketplace for peer-to-peer sales operating in 190 markets globally, and has enabled $74 billion of gross merchandise volume in 2022.
Enhancing experience by utilizing the latest technology to empower sellers and buyers and building the trust of customers has been an integral part of the strategy of the online marketplace.

In 2020, EBAY launched its Authenticity Guarantee program, which draws on independent experts to vet and verify items sold on the platform. It was followed up with the debut of an authentication service for luxury handbags that allowed customers to get professional authentication for new and pre-owned handbags from luxury brands such as Saint Laurent, Gucci, and Balenciaga.

Even EBAY’s acquisitions reflect the platform’s unwavering focus on building trust while it increases its penetration in the fast-growing pre-loved segment to differentiate itself from numerous peers focusing on new and largely in-season goods.

As a result, after acquiring marketplace compliance solution 3PM Shield in February 2023 and used-sporting-goods marketplace, SidelineSwap earlier this month, on May 15, EBAY signed a definitive agreement to acquire Certilogo, a provider of AI-powered apparel and fashion goods digital IDs and authentication.

The acquisition is subject to the satisfaction of customary conditions, including regulatory approvals, and is expected to be closed in the third quarter.
Certilogo's platform uses digital technology to tag products with virtual IDs, or “product passports,” that enable traceability and protection against counterfeits. It empowers brands and designers to manage the lifecycle of their garments while providing consumers with a seamless way to confirm authenticity, access reliable information about branded items, and easily activate circular services.

According to Charis Marquez, VP of EBAY, "Certilogo's technology and talented team allows eBay to build on this commitment, establishing eBay as a leader in pre-loved fashion and offering new ways for consumers to connect and engage with brands."

Despite ten consecutive interest-rate hikes by the Federal Reserve in just over a year, the red-hot and decades-high inflation is yet to be sufficiently tamed. Amid the rising cost of living crisis, the appetite for second-hand goods has witnessed phenomenal growth, especially among young shoppers.
Moreover, with increasing awareness and emphasis on sustainable consumption, the stigma surrounding pre-owned goods has all but disappeared while community and circularity have been embraced.

Unsurprisingly, ThredUp’s annual Resale Report showed that the global pre-owned apparel market is set to double by 2027 to $351 billion -- 9 times the growth of the broader retail sector.

However, the concern of ending up with counterfeited goods has fueled the trust deficit and has emerged as a significant roadblock preventing greater adoption. The global market trading in fake goods is worth a staggering $4.5 trillion, with faux luxury merchandise accounting for up to 70 percent ($1.2 trillion), according to a 2019 Harvard Business Report.

Even Washington has expedited its crusade against dupes. It has also received legislative firepower through INFORM Consumers Act, which modernizes consumer protection laws and requires web marketplaces to collect and verify basic business information from sellers before they are permitted to sell online. Moreover, SHOP SAFE Act incentivizes platforms, such as EBAY, to follow best practices for screening and vetting vendors and the products they put up for sale, and forces them to address repeat-counterfeit-sellers.

Given the political emphasis on building and retaining consumer trust, the importance of Certilogo’s assumption can hardly be overstated.
This acquisition would also benefit EBAY’s ecosystem by offering fresh opportunities for small businesses to engage with consumers. By assuring their customers of the legitimacy and sustainability of their products, these businesses could be benefited by improving toplines, driven by repeat purchases from loyal customers.

Lastly, with EBAY’s earnings report last month showing increased traction in the luxury sector, with in-focus categories including watches, handbags, jewelry, and sneakers, its acquisition of Certilogo keeps it well-positioned to keep building momentum.