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Why I Expect eBay's Stock To Rise Despite Competition

|Includes: eBay Inc. (EBAY)
Summary

Price expected to increase to $40 in 2018. (Per Merrill Lynch 3Q Internet/e-commerce sector preview.

Growth of StubHub contributing to growth of eBay increased stock price in 2018.

Increasing competition in the e-commerce industry has never been this intense.

    eBay has been a household name throughout the United States as well as the rest of the world since the year 1995. As the emergence of the internet in the 1990s hit the world by surprise, eBay came a long as the first of its kind. eBay became the first multinational e-commerce company which featured a user-to-user interface. As the 21st century came around, eBay was still at the top of the e-commerce industry, but started to see other established competition arise. The main competitor to eBay, Amazon, was started around the same time that eBay was (1994), but did not establish itself as a main competitor to eBay until the early 2000s.

    Now in 2017, through Amazon starting to sell products that other e-commerce companies do not sell and constantly implementing customer-friendly ideas to their company, they have surpassed eBay. Even though this is the case in recent years, eBay's stock price is not projected to drop in 2018 but expected to increase. As of December 6th, 2017, eBay's current stock price is at $36.83. In Merrill Lynch's Internet/e-Commerce 3Q sector preview, analysts have come to the conclusion that eBay's stock price will rise to $40. 

    As this report suggests that eBay's stock price will rise to $40 in 2018, there are a couple of reasons why this could happen. The first reason is because first-party advertising on eBay's website will help increase revenue growth. Another reason that this stock price is projected to rise to $40 in 2018 is because of the increasing revenues from their main subsidiary, StubHub. With StubHub rising to the top of the ticket exchange industry, their increased revenues will help eBay Inc. increase their value. 

    In recent years, competition in the e-commerce industry has increased like no one has ever seen. With competitors such as Costco, Jet, and Walmart trying to make an impact in the e-commerce industry, competition has increased tremendously. But throughout this sudden emergence of competition in the e-commerce industry, eBay remains able to stay profitable and even projected to increase revenues despite this level of competition.