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eBay Announces Public Offering of Notes Due 2025 & 2030
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eBay (EBAY - Free Report) recently announced an underwritten public offering of senior unsecured notes aggregating $750 million. These notes have been issued in two tranches of different amounts, with varying coupon rates and maturities.
The first tranche of $300 million carries an interest rate of 1.900% and is due 2025 while the second tranche of $450 million, which has an interest rate of 2.700%, is due 2030. The offering is expected to close on Jun 15, 2020, subject to customary closing conditions.
This offering is in addition to the company's existing 1.90% senior unsecured notes due 2025 and 2.70% senior unsecured notes due 2030, announced in March.
eBay will use the proceeds of the new notes to repay all its 2.875% senior unsecured outstanding notes due August 2021. The remaining fund can be used for general corporate and other purposes.
At the end of first-quarter 2020, cash and short-term investment balance came in at $4.4 billion, up from $2.8 billion on Dec 31, 2019. Further, eBay’s balance sheet is highly leveraged, with a long-term debt of $7.7 billion at the end of the first quarter.
The company generated $702 million of cash from operating activities during the last reported quarter, down from $811 million in the prior quarter. Its free cash flow came in at $604 million during the quarter. Further, the company repurchased $4 billion of shares and paid dividend of $114 million, returning a total of $4.1 billion to shareholders in the first quarter.
We believe that eBay has a strong balance sheet, which will help it capitalize on investment opportunities and pursue strategic acquisitions, thereby further improving prospects. In our view, the senior notes’ offering will bring down the company’s cost of capital, and in turn strengthen the balance sheet and support growth.
These notes should provide financial flexibility and propel long-term growth.
Bottom Line
E-commerce, which has already become part and parcel of everyone’s lives in today’s fast-paced world, is much more in demand now owing to COVID-19-led social distancing protocols, quarantine and lockdowns, along with rising fears of contracting the virus.
The company is thriving on the growing adoption of e-commerce owing to coronavirus-led social-distancing protocols, quarantine and lockdowns on a global basis.
Notably, eBay recently raised its second-quarter 2020 guidance to reflect higher online sales amid the coronavirus pandemic. It now projects revenues within $2.75-$2.8 billion, up from the previous guided range of $2.38-$2.48 billion, indicating year-over-year growth of 13-16%. In addition, non-GAAP earnings are expected within $1.02-$1.06 per share, up from the previous expectation of 73-80 cents.
We believe eBay’s growth initiatives, which are aimed at enhancing seller experience by offering innovative seller tools and delivering improved buyer experience via utilizing structured data, will help it gain in the current scenario.
However, stiff competition from Amazon (AMZN - Free Report) and other online marketplaces remain a major concern.
Zacks Rank and Other Stocks to Consider
eBay currently carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Wayfair Inc. (W - Free Report) and Inphi Corporation . While Wayfair sports a Zacks Rank #1, Inphi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Wayfair and Inphi is currently projected at 23% and 37.7%, respectively.
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eBay Announces Public Offering of Notes Due 2025 & 2030
eBay (EBAY - Free Report) recently announced an underwritten public offering of senior unsecured notes aggregating $750 million. These notes have been issued in two tranches of different amounts, with varying coupon rates and maturities.
The first tranche of $300 million carries an interest rate of 1.900% and is due 2025 while the second tranche of $450 million, which has an interest rate of 2.700%, is due 2030. The offering is expected to close on Jun 15, 2020, subject to customary closing conditions.
This offering is in addition to the company's existing 1.90% senior unsecured notes due 2025 and 2.70% senior unsecured notes due 2030, announced in March.
eBay will use the proceeds of the new notes to repay all its 2.875% senior unsecured outstanding notes due August 2021. The remaining fund can be used for general corporate and other purposes.
eBay Inc. Price and Consensus
eBay Inc. price-consensus-chart | eBay Inc. Quote
Cash Position
At the end of first-quarter 2020, cash and short-term investment balance came in at $4.4 billion, up from $2.8 billion on Dec 31, 2019. Further, eBay’s balance sheet is highly leveraged, with a long-term debt of $7.7 billion at the end of the first quarter.
The company generated $702 million of cash from operating activities during the last reported quarter, down from $811 million in the prior quarter. Its free cash flow came in at $604 million during the quarter. Further, the company repurchased $4 billion of shares and paid dividend of $114 million, returning a total of $4.1 billion to shareholders in the first quarter.
We believe that eBay has a strong balance sheet, which will help it capitalize on investment opportunities and pursue strategic acquisitions, thereby further improving prospects. In our view, the senior notes’ offering will bring down the company’s cost of capital, and in turn strengthen the balance sheet and support growth.
These notes should provide financial flexibility and propel long-term growth.
Bottom Line
E-commerce, which has already become part and parcel of everyone’s lives in today’s fast-paced world, is much more in demand now owing to COVID-19-led social distancing protocols, quarantine and lockdowns, along with rising fears of contracting the virus.
The company is thriving on the growing adoption of e-commerce owing to coronavirus-led social-distancing protocols, quarantine and lockdowns on a global basis.
Notably, eBay recently raised its second-quarter 2020 guidance to reflect higher online sales amid the coronavirus pandemic. It now projects revenues within $2.75-$2.8 billion, up from the previous guided range of $2.38-$2.48 billion, indicating year-over-year growth of 13-16%. In addition, non-GAAP earnings are expected within $1.02-$1.06 per share, up from the previous expectation of 73-80 cents.
We believe eBay’s growth initiatives, which are aimed at enhancing seller experience by offering innovative seller tools and delivering improved buyer experience via utilizing structured data, will help it gain in the current scenario.
However, stiff competition from Amazon (AMZN - Free Report) and other online marketplaces remain a major concern.
Zacks Rank and Other Stocks to Consider
eBay currently carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Wayfair Inc. (W - Free Report) and Inphi Corporation . While Wayfair sports a Zacks Rank #1, Inphi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Wayfair and Inphi is currently projected at 23% and 37.7%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>