eBay Popped After Capitulating To Activist Shareholders, But The Chart Is Pointing Down For Now

Summary:

• eBay Inc EBAY popped by as much as 5.3 percent on Friday morning before pulling back to end the day about 0.5 percent higher.
• The company announced it had entered into cooperation agreements with two activist shareholders.
• However, at this stage in its current market cycle, we see downside risk in the coming months.

eBay (EBAY) Stock Weekly Chart

EBay announced that it had entered into cooperation agreements with activist shareholders, Elliott Management and Starboard Value and will add two independent directors to the board. This will involve an “operating review” of its portfolio of services, including StubHub and eBay Classifieds.

CEO Devin Wenig explained that, “We see tremendous opportunity ahead and want to see eBay’s full potential realized over the long-term. The initiatives we are announcing today are the result of this constructive dialogue.”

In reviewing the market cycles for eBay shares, we can see it is still in the rising phase of the current cycle. This is an improved stock, after a gap in January extended gains. Yet we can see in our analysis that a declining phase is likely due before its current cycle ends in April.

While in the near term, the stock could move higher, our forecast is for a dip to near $36, which looks like a nice longside opportunity.

Related Links:

eBay To Conduct Strategic Reviews, Could Spin Off StubHub

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