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Top Trades for Fri, 01 Mar 2019 12:35 – EBAY

 (basic) 

Phil / EBAY – Elliott Management has one of the best records / reputations in the Bay Area relative to activist investing ( they were drivers behind MSFT )-  I think this may be a good opportunity.   They are close to getting a board seat.

https://www.businesswire.com/news/home/20190122005513/en/Elliott-Management-Sends-Letter-Board-Directors-eBay

 

Elliott Management Corporation (“Elliott”), which manages funds that beneficially own more than 4% of eBay Inc. (“eBay” or the “Company”), today released a letter outlining a significant value-creation opportunity at eBay. The letter, addressed to the Company’s Board, noted that the opportunity could lead to eBay being valued at $55-$63 per share, representing upside of more than 75% to 100% from today’s price.

EBAY/Batman – Well a chimpanzee could have turned MSFT around once they got Ballmer out but EBAY is a good company and doesn't need to steal your identity to make money but where was your enthusiasm back in Dec, when they were at $26?  Now up almost 50% you want to get in?

$37.42 is $32.4Bn and they are dropping $3Bn to the bottom line but that's without paying taxes so I'd say $600M in taxes so we'll call earnings $2.4Bn so p/e is still nice at 13.5.  

Year End 31st Dec 2013 2014 2015 2016 2017 2018 2019E 2020E CAGR / Avg
Revenue $m 8,257 8,790 8,592 9,298 9,927 10,746 10,858 11,514 +5.4%
Operating Profit $m 2,454 2,476 2,197 2,325 2,431 2,222     -2.0%
Net Profit $m 2,856 46.0 1,725 7,266 -1,017 2,530 2,343 2,514 -2.4%
EPS Reported $ 1.57 -0.69 1.60 6.37 1.96 2.08     +5.8%
EPS Normalised $ 1.57 -0.69 1.64 6.37 1.82 2.08 2.67 3.05 +5.8%
EPS Growth % -21.6     +289 -71.5 +14.7 +27.9 +14.4  
PE Ratio x           17.8 13.9 12.2  
PEG x           0.64 0.97 1.10
Profitability

Not great growth but not no growth so 15x is very fair and 20x not out of the question so, I think I'd pay $30 and be happy so we can sell 10 EBAY 2021 $35 puts for $4.10 ($4,100) in the LTP and keep an eye on them but, if you like them, there's nothing wrong with the $32 ($9.15)/$42 ($4.40) bull call spread at $4.75 and 20 of those would be $9,500, netting you into the $20,000 spread for $5,400 with an upside of $14,600 (270%) and you're $10,000 in the money to start.  


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