eBay Buyers Have Buyback on the Brain

Is eBay(EBAY Quote - Cramer on EBAY - Stock Picks) about to speed up its stock-buyback program?

That's what recent gains in shares of the auction giant might be indicating. The stock has climbed more than 12% over the last five trading sessions, closing Wednesday at $36.71. The Nasdaq, meanwhile, has inched up only 2% over the same period.

This latest run-up comes even as eBay competitors grow bolder, and during what observers say is usually a weak time of the year for the company. This week, Amazon.com(AMZN Quote - Cramer on AMZN - Stock Picks) announced that it would launch its own payment service, which will be a rival to eBay's PayPal.

Meanwhile, online retailer Buy.com recently introduced Garage Sale, an application that lets users buy and sell goods over popular platforms like social networking site Facebook.

In addition, this time of year historically has been when investors turn their backs on the stock. "And to top it all off, we are in what is usually EBAY seasonal lows," writes the blog "Only eBay."

But a filing by eBay last Friday with the Securities and Exchange Commission has some investors expecting another leg up. The filing disclosed that eBay doubled its credit line with Bank of America(BAC Quote - Cramer on BAC - Stock Picks) to $2 billion, with an option to increase it to $3 billion in the future, notes American Technology Research analyst Tim Boyd.

Boyd says the market is beginning to price in one of three options: that the company will accelerate its stock-buyback program, make an acquisition, or declare a one-time dividend with the extra funds on hand.

But a closer look at all three scenarios suggests a stock buyback is the most likely. And thankfully for eBay investors, it also may be the best outcome.

Want more? Check out TheStreet.com TV video. Jim Cramer and Vishesh Kumar discuss why eBay keeps going up.

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