Investors Bid Up eBay Shares
Shares of eBay Inc. surged 37 percent Wednesday after the Web auction-site operator posted a 700 percent increase in fourth-quarter profits and set a 3-for-1 stock split.
The company (EBAY) said it earned $2.8 million, or 7 cents a share, compared with $214,000, or 1 cent, a year earlier, excluding special items. eBay was projected to earn 4 cents a share, according to a survey of analysts by First Call Corp.
Revenue climbed to $19.5 million from $2.6 million in the year-ago quarter, a 650 percent jump. For the year, revenue jumped to $47.4 million from $5.7 million in 1997, the company said in a press release after the markets closed Tuesday.
Donaldson Lufkin & Jenrette analyst Jamie Kiggen rewarded eBay's performance by upping the stock's rating to a "buy" from "market perform" and raising his target price to $360 a share. eBay's stock blew through Kiggen's $100 target price a few months ago, but Kiggen had refused to increase the target until Wednesday.
EBay catapulted 82 5/8 to close at 303 1/2 Wednesday, off the 52-week high of 321.
In a separate development, officials with New York City's fraud-fighting Department of Consumer Affairs confirmed they've launched an investigation of eBay. The Associated Press reported the probe centers whether people who use the online auctioneer falsely labeled some sports memorabilia as "one-of-a-kind."
The stock split, approved Tuesday by eBay's board of directors, will affect shareholders of record on Feb. 9. The split is to be effective on March 1.
eBay, which operates an auction site that allows individuals to sell items to other individuals, netted $1.5 million, or 4 cents a share, after including charges related to employee stock compensation and acquisition expenses.
The company attributed its improved results to increased activity on its site. In the latest quarter, gross merchandise sales - the value of goods traded - jumped 57 percent to $307 million from $195 million in the third quarter.
The number of registered users rose to 2.1 million as of Dec. 31 from about 1.2 million on Sept. 30. In addition, eBay hosted over 13.6 million auctions during the fourth quarter, up from 9.2 million in the third quarter, the company said.
Written By Jeffry Bartash