Earnings: Is eBay Going To Start Charting Consumer Buying Habits?

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Includes: AMZN, EBAY, GM, GOOG, GOOGL, INTC, PYPL
by: JJ Kinahan

Summary

INTC broke news ahead of Q1 that it was moving into a restructuring that would step up its evolution from a PC company to cloud-based powerhouse.

EBAY, still stretching after its split from PYPL, is on track to deliver results that are half of what they were a year ago when PYPL was contributing.

An analyst says investors may be drawn to news about GM’s March announcement that it bought Cruise, a small startup that’s got self-driving technology.

There's a variety of earnings reports coming out the next couple of days that might give some insight into how different segments of the economy are performing. Investors will be looking at results after the session ends today from semiconductor giant Intel Corp. (NASDAQ:INTC) and online sales site eBay (NASDAQ:EBAY), and then auto manufacturer General Motors (NYSE:GM) before the bell on Thursday.

INTC Inside the Cloud

INTC broke news ahead of Q1 that it was moving into a restructuring that would step up its evolution from a PC company to cloud-based powerhouse. The company is refocusing on the billions of connected, smart devices and the Internet of Things. INTC said it expected to take a one-time restructuring charge of $1.2 billion in Q2.

Analysts say they want to know what the next chapter in the restructuring might look like and how well INTC's efforts to stem the declines in PC sales through innovation in other segments like gaming and set-top boxes. Recently, INTC unveiled its Core i7 processor Extreme Edition, what analysts called its "most powerful desktop processor ever, designed for the needs of today's mega-tasking gamers and content creators."

Analysts reporting to Thomson Reuters are forecasting a per-share profit of $0.53, off $0.02 from the year-ago period. Revenues are projected to edge up to $13.5 billion from $13.2 billion.

Short-term options traders have priced in a potential 3% share price move in either direction around the earnings release, according to the Market Maker Move™ indicator on the thinkorswim®platform by TD Ameritrade.

Ahead of earnings, options traders were active in the 35- and 34-strike puts and 35-strike calls. The implied volatility is at the 17th percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

Figure 1: Breakout Above $33. INTC shares rallied in the last few weeks above former resistance at $33, reaching $35 per share and settling into a holding pattern ahead of earnings. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

EBAY to Watch Consumers Buy

EBAY, still stretching after its split from PayPal (NASDAQ:PYPL), is on track to deliver results that are half of what they were a year ago when PYPL was contributing to top and bottom lines. At the same time, analysts point out the company is facing growing competition in the online sales space and is looking to grab a spot in the online marketplace rather than as an auction site of second-hand goods.

It's struggled with sales results, as reported by Channel Advisor. In the three-month period ending this month, analysts are projecting a decline in sales at a time when ecommerce sales at rivals are growing.

Analysts also say they are looking for more information on the recently acquired SalesPredict, the Israel-based analytics company. SalesPredict uses technology to decipher consumer buying behavior and sales conversions, a tool EBAY says it can use to step up sales and better compete against ecommerce rivals Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL).

For the quarter, Thomson Reuters analysts are forecasting a per-share profit of $0.42 a share, a 44% drop below the year-ago profit of $0.76 a share. Revenues are forecast to tumble 50% to $2.174 billion from $4.4 billion a year ago.

Short-term options traders have priced in a potential share-price move of 6% in either direction around the earnings release, according to the Market Maker Move indicator.

EBAY options are typically not the most active, but there was some trading at the 26.5-strike puts and the 27-strike calls. The implied volatility is at the 39th percentile, notably higher than what we've seen in some other technology stocks this earnings season.

Figure 2: Filling the Gap. EBAY left a gap at about $26.50 two quarters ago. The stock recently rallied to fill this gap ahead of its next earnings report. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

GM Slips into Cruise Control

Investors and analysts are eager to learn of GM's operating results, particularly its China ventures, which account for about 50% of total sales. Analysts say China is back on track and Europe is showing signs of recovery.

But a Motley Fool analyst says investors may be more drawn to news about GM's March announcement that it bought Cruise, a small startup that's got self-driving technology that could power GM into the self-driving auto business.

"It's believed that Cruise's technology will allow GM to make a significant leap in its ongoing development of self-driving technology, possibly allowing it to take a lead over much of the industry," according to the Motley Fool.

"GM's purchase of Cruise was completed in May, and the company wasted no time getting to work: Self-driving versions of GM"s upcoming electric car, the Chevrolet Bolt, have been spotted on San Francisco streets, and at least one with Cruise co-founder Kyle Vogt in the driver's seat."

Analysts reporting to Thomson Reuters are forecasting a per-share profit of $1.29, up from $1.08 in the year ago period. Revenues are projected to edge up to $38.6 billion from $38.2 billion last year.

Short-term options traders have priced in a potential 3% share price move in either direction around the earnings release, according to the Market Maker Move indicator.

Ahead of earnings, options traders were active at the 32- and 31-strike puts and there was activity at the 31-strike calls. The implied volatility is at the 7th percentile.

Figure 1: Rocky Road for GM. GM shares have been trending lower over the last couple of months, but recently rebounded with the broader market. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.