Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

eBay Inc (EBAY): Why Now Is the Time to Buy

Stocks are moving on quarterly earnings this week, and eBay Inc (NASDAQ:EBAY) is no exception. Investors sent eBay Inc stock lower in after-hours trading on Wednesday, despite the e-commerce company posting a 19% increase in profit for its first quarter. Unfortunately, double-digit increases in both revenue and profit weren’t enough to stop shares of eBay from dipping more than 5% at the market open today. What’s really going on with this Internet darling?

eBay Inc (NASDAQ:EBAY)The stock stumbles
Slowing sales growth in eBay Inc (NASDAQ:EBAY)’s PayPal division coupled with a weaker-than-expected forecast for the company’s second quarter is the real culprit. The company issued second quarter earnings guidance of $0.61 to $0.63, and revenue between $3.8 billion and $3.9 billion. For comparison, analysts had expected earnings of $0.66 per share on revenue of $3.95 billion.

The market failed to factor in the fact that eBay’s full-year guidance remains the same. This tells investors that eBay’s transformation is readily underway, and that its long-term growth trajectory is still intact.

It’s also important to note that eBay Inc (NASDAQ:EBAY) is up about 55% in the last year, whereas rival e-commerce giant, Inc. (NASDAQ:AMZN) is up 41% for the year. Additionally, what the recent decline in the stock doesn’t show is that eBay is on its way to becoming a global powerhouse. Much like its rival Amazon, eBay is a long-term investment play. Alas, quarterly earnings forecasts can distract investors from taking a bigger picture view, which is often necessary when investing in a growth stock or turnaround story, such as eBay.

A more competitive marketplace
In an effort to reinvigorate its namesake marketplace, eBay Inc (NASDAQ:EBAY) is taking a page out of, Inc. (NASDAQ:AMZN)’s playbook. Similar to Amazon’s pricing structure, third-party sellers on eBay’s platform are now able to list products free, and simply pay a flat sales fee on the final value of the item sold. This strategy appears to be working, as eBay added 3.9 million new users to its online marketplace in the first quarter.

Moreover, eBay CEO John Donahoe aims to double the company’s active user base in the next two years, with the goal of reaching $300 billion in sales and PayPal payments by 2015. While this is certainly ambitious, eBay is well-positioned in mobile, and has a growing network of large retail partners — two growth drivers that should push the stock higher in future quarters., Inc. (NASDAQ:AMZN) may be eBay Inc (NASDAQ:EBAY)’s biggest competitor today; although, where the stocks are concerned, eBay is the name to own today. To that end, Amazon trades at more than 74 times next year’s earnings, which makes the stock look wildly overpriced. eBay, on the other hand, trades at just 17 times fiscal 2014 earnings.

The article Why Now Is the Time to Buy eBay Stock originally appeared on

Fool contributor Tamara Rutter owns shares of and eBay. The Motley Fool recommends and eBay. The Motley Fool owns shares of and eBay.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.