eBay‘s (NASDAQ:EBAY) stock price neared its all time high on Monday as it rose 5% to a 52 week high of ~$52. The growth was driven by optimism of the company gaining big from a surge in online shopping ahead of the year-end holidays. eBay had reported better than expected Black Friday and Thanksgiving numbers with mobile transaction volumes growing dramatically.  We expect the trend to have continued on Cyber Monday and look forward to an official announcement about it.
We believe that eBay will gain further traction through the holiday season as it still is largely looked upon as a secondary place to look for an item. The usual practice is to search online for an item you want to buy and if its out of stock or unavailable you go to eBay. With Black Friday and Cyber Monday over, we expect the traffic to eBay sites, number of item listing and transactions to increase over the coming weeks as shoppers who got left behind catch up on their shopping.
Is eBay playing a bigger role this holiday season?
Preliminary data for Cyber Monday indicates that consumers flocked to eBay to do their holiday shopping. Sales volumes were up 57% early Monday, a five fold increase over last year.  The Monday morning trends were inline with data for Thanksgiving and Black Friday. Sales on these two days had increased almost three fold.  With Amazon holding on to its strong growth rates, eBay seems to have gained at the expense of Google and other online shopping services.
The multiple fold increase in transactions over eBay leads us to believe that eBay is participating in a much different and larger way than before this holiday season. The primary reason behind eBay’s success could be the popularity of its mobile apps. Mobile devices accounted for nearly 30% of the total online traffic to retail sites this Thanksgiving weekend and with the company being one of the few to have a successful m-commerce strategy and popular apps to back its services, we believe that eBay will play a bigger role this holiday season.
Unlike its competitors, eBay also gains from services other than its core Marketplaces offering. Its payment service, PayPal reported a 2.5 times increase in global mobile payments through PayPal mobile over the Thanksgiving weekend. GSI Commerce also reported an almost two fold increase in mobile sales. We expect these growth rates to at least stay the same over the coming holiday seasons as the company shifts its business towards a fixed price model over the coming years and improves & capitalizes on its existing mobile capabilities.
How will early shopping effect eBay?
Strong online sales growth on Thanksgiving Day and “Black Friday” sparked concern that shoppers were just buying earlier threatening revenue later in the season. However, Jay Henderson, the strategy director for IBM Smarter Commerce, believes that extending the shopping season has really just fueled additional online spending rather than cannibalizing days later in the season.  We believe that eBay is better protected than other marketplaces like Amazon from the early shopping effect. People still turn to eBay’s Marketplaces for items they can’t find elsewhere and a nationwide early shopping spree which could spark such a situation would benefit eBay instead of harming it. The strong demand for out of stock items could result in a upside to the number of listing on eBay Marketplaces. The company doesn’t stock on items and has fixed charges on listings and an increase in the number of listing should help Marketplaces grow revenues.
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Besides relying on the success of its mobile apps the company also put together an effective marketing plan across several channels ahead of the holiday season and this should help generate traffic on its sites. 
We currently have a $50 Trefis price estimate for eBay, which is at par with the market price.Notes:
- Black Friday: eBay Mobile Sees 153% Growth in Mobile Transacted Volume, eBay Ink, November 2012 [↩]
- CyberMonday early look – 11am ET, ChannelAdvisor, November 2012 [↩]
- Holiday 2012: Day 4 of Cyber Five – Cyber Sunday Results, ChannelAdvisor, November 2012 [↩]
- Online sales jump on Cyber Monday, eBay shines, Chicago Tribune, November 2012 [↩]
- eBay Holiday TV Commercial: ‘Pony’, eBay YouTube Channel, November 2012 [↩]