Consumers have made some big shifts in recent years. The pandemic fueled spending on home goods and electronics. Then, consumers shifted away from buying those products in favor of services such as travel and tourism.
Today, consumer spending is showing some signs of shifting. That shift indicates that consumers may be more price-conscious following inflation, meaning they’ll want to look for the lowest-priced bargains.
That may explain why eBay (EBAY) is faring well here. The online auction leader just beat earnings and increased its guidance for the year ahead.
eBay profits from any sale on its platform, whether a new product or an existing one. With consumers trending towards spending less, eBay could continue to perform well from here.
Shares are flat over the past year, reflecting the uncertainty in consumer trends in general. But eBay has grown earnings by nearly 10 percent. Plus, it sports an impressive 27 percent profit margin.
Action to take: Investors may like shares here. eBay trades at about 10 times earnings. The company even started a dividend last year, with a 2.3 percent yield at this time.
For traders, shares are likely to trend higher.
The June $50 calls, last trading for about $2.25, could see mid-to-high double-digit returns in the weeks ahead. Traders may want to take quick profits on any one-day jump higher in shares from here.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.