Cantor Fitzgerald’s Top Internet Stocks: Best Stocks To Buy According To $13.2 Billion Firm

19. eBay Inc. (NASDAQ:EBAY)

Number of Hedge Fund Holders In Q2 2024: 38

Share Price Target Upside: -8%

Cantor’s Rating: Neutral

Cantor’s Share Price Target: $58

eBay Inc. (NASDAQ:EBAY) is one of the oldest eCommerce marketplaces in the industry. It is one of the original players in the market, but unlike Amazon, has not transformed into a trillion dollar company due to lower user and merchant use and no cloud computing SaaS tailwinds. Yet, due to its eCommerce business, eBay Inc. (NASDAQ:EBAY) shares key fundamentals of its hypothesis with Amazon. Primarily, these are operating margins, growth, and merchandise volume. Strong performance on these fronts means that the shares do well, and this has also been the case in 2024 with eBay Inc. (NASDAQ:EBAY)’s stock being up by 44% year to date. At the heart of investor optimism is the firm’s strategy to grow its volume and margins by attracting high spenders on its platform via Focus Categories. These cater products specific to customer needs, and try to entice large spenders with the hope of spillover in other segments. eBay Inc. (NASDAQ:EBAY) is also aiming to cut down costs via tighter operating margins, and improving its customer recommendation through Gen AI.

eBay Inc. (NASDAQ:EBAY)’s management shared details for its cost reduction initiatives during the Q2 2024 earnings call:

“Shifting to profitability, non-GAAP gross margin declined roughly 30 basis points year-over-year in Q2 due to tax-related matters, including Canadian digital sales tax expenses recognized retroactively in 2022, traffic acquisition costs associated with a ramp in offsite [ph] ads, and foreign exchange headwinds. These headwinds were partly offset by operational efficiencies, including lower cost of payments and lower depreciation expenses.

Non-GAAP operating margin was 27.9% in the quarter, improving 1 point year-over-year, as operational efficiencies, including our structured cost program, more than offset the higher cost of revenue of foreign exchange headwind of approximately 40 basis points and reinvestments in our full frontal marketing initiatives. As a result, non-GAAP operating income grew 5% year-over-year in Q2, and non-GAAP earnings per share grew by nearly 15% to $1.18.”