eBay (EBAY) Stock Slips 5% on Weak Guidance Amid Supply Chain Constraints, Analyst Says Shares Fairly Valued
Shares of eBay (NASDAQ: EBAY) are down 5% in pre-open Thursday after the company reported Q3 results and shared its Q4 outlook.
eBay reported Q3 EPS of $0.90, slightly ahead of the analyst estimate of $0.89. Revenue for the quarter came in at $2.5 billion versus the consensus estimate of $2.46 billion.
"Our team delivered another strong quarter, once again meeting or surpassing our expectations for all key business metrics, making further progress on our multi-year strategy. Our Q3 results, driven by the near completion of our managed payments migration, expansion of our advertising portfolio, and volume growth in our focus categories, demonstrate that our strategic playbook continues to work,” said Jamie Iannone, Chief Executive Officer of eBay.
For this quarter, the ecommerce company is calling for Q4 2021 EPS of $0.97-$1.01, with the midpoint coming a bit lower than the consensus of $1.00. The company also guided for revenue of between $2.57 billion to $2.62, which disappointed investors given the holiday season falls under this quarter.
Raymond James analyst Aaron Kessler reiterated the Market Perform rating on eBay on “mixed quarter.”
“Guidance implies continued near-term GMV declines due to increased mobility and the transition away from lower-value buyers. We expect GMV to return to growth in 2H22 as comps ease. Payments migration continues at a strong pace, with 90% of global on-platform volume during the quarter (up from 80% exiting 2Q), and the company increased its Payments revenue estimate from $1.8B to $2.0B for the year. We are also encouraged by growth in emerging categories, with strong growth in sneakers, watches, handbags, and trading cards. While we remain positive on eBay’s improved execution, we believe tough GMV comps through 2Q22 will likely limit material upside from current levels and expect shares to remain range bound until we get through tougher comps. Given our expectation for ~mid single digit long-term revenue growth, we believe shares are fairly valued at ~9x 2022 EV/ EBITDA,” Kessler said in a client note.
Mizuho analyst James Lee also maintained a Neutral rating and a $65.00 per share price target on the stock.
“While we are encouraged by continued product improvements, we believe that 3P merchants could be impacted more by the supply chain than larger online retailers. As a result, we expect EBAY to lag in the recovery cycle compared to peers. Due to the temporary nature of supply shortage, we are leaving our long-term estimates unchanged,” Lee said in a note sent to clients.
Shares of eBay closed at $77.66 yesterday.