Goldman Sachs’ List Of Stocks That Hedge & Mutual Funds Love & Hate: 28 Stocks On The Mutual and Hedge Funds Radar

24. eBay Inc. (NASDAQ:EBAY)

Number of Hedge Fund Holders In Q2 2024: 38

Category: Shorted by HFs and overweight among mutual funds

eBay Inc. (NASDAQ:EBAY) is one of the original eCommerce companies that were set up during the dotcom era of the 1990s. Unlike larger rival Amazon, the firm also sells novelty and other items on its platform. The high volume dependent nature of the eCommerce industry means that firms like eBay Inc. (NASDAQ:EBAY) are stressed for margins. Consequently, it has been unable to scale up to meet Amazon’s size especially since the latter has also benefited from the margin friendly revenue nature of the software and cloud computing industry. However, eBay Inc. (NASDAQ:EBAY)’s shares are nevertheless up by 54% year to date as the firm undertakes a new strategy to beef up volume and margins. This is its Focus Categories strategy that aims to attract high spenders via specific products and then try to make them spend on other categories.

On the topic of cost control, here’s what eBay Inc. (NASDAQ:EBAY)’s management shared 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.”