Options Traders Are Betting on eBay Rally

Shares of eBay ($EBAY) have been hurt recently due to the introduction of Apple Pay. But as Bloomberg notes, the impact probably won’t be much, and options traders are already betting on a turnaround for eBay’s stock.

Concern that Apple Pay will hurt EBay Inc. (EBAY)’s business has been overblown and the shares are poised to rally, options trading suggests.

EBay shares are down 6.8 percent since late August, when a selloff began as Apple Inc. prepared to unveil its mobile-payment system. Calls that profit should EBay gain 10 percent reached the most expensive level last week relative to puts betting on a similar drop, a sign of increased bullishness on the stock.

While Apple Pay brings fresh competition, electronic payments are still EBay’s fastest-growing revenue source. It will take time for another company to challenge EBay’s dominance in helping shoppers buy and sell products online, according to Aaron Kessler, an analyst at Raymond James & Associates who rates EBay stock outperform.

“It’s still early to see in terms of how directly competitive Apple Pay will be,” Kessler said by phone from San Francisco. “The near-term impact is probably negligible.”

(…)

Apple Pay will have limited effect on PayPal because the the system works only on Apple’s newest devices and PayPal has a strong international business, according to analysts including Youssef Squali at Cantor Fitzgerald LP.

big.chart09222014

Posted by on September 22nd, 2014 at 5:23 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.