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eBay drops 6% after forecasting holiday sales below expectations; Analysts cut numbers

November 7, 2023 4:40 PM
(Updated - November 8, 2023 5:19 AM EST)

eBay (NASDAQ: EBAY) provided guidance for the fourth quarter that missed analyst expectations.

The company expects net revenue in the range of $2.47 billion to $2.53 billion, while analysts were looking for as much as $2.6 billion. eBay sees Q4 EPS in the range of $1.00-$1.05, while the consensus stood at $1.05.

EBay shares lost more than 6.5% in early New York trading on Wednesday.

Looking at the full year, eBay anticipates net revenue to be between $10.02 billion and $10.08 billion. eBay sees FY EPS of $4.17-$4.22. The Street had expected FY EPS of $4.15 on revenue of $10.15 billion.

“In the face of macroeconomic uncertainty, we continue to make meaningful progress against our ambitious vision to reinvent the future of ecommerce for enthusiasts,” said Jamie Iannone, Chief Executive Officer at eBay.

In the third quarter, eBay reported adjusted EPS from continuing operations of $1.03, better than the consensus by 3 cents. The revenue for the quarter was $2.50 billion, marking a 5% year-over-year increase, and it was in line with the analyst estimate.

eBay's gross merchandise volume (GMV) in the third quarter reached $18.0 billion, reflecting a 1.6% increase YoY, which exceeded the estimate of $17.77 billion.

The number of active buyers on the platform was 132 million, showing a decrease of 2.2% YOY but still slightly above the consensus of 131.3 million.

BofA analyst Justin Post slashed the price target to $44 per share after a "mixed" quarter.

"eBay’s comment on European macro pressure is cautious for the entire eCommerce industry, but since September was also slow for eBay, we don’t think Amazon is as impacted. Eventual sale of Adevinta stake and buybacks with proceeds is a potential eBay catalyst, but with limited cash flow for buybacks in 4Q (due to 1x tax payment), we prefer Expedia in the Internet value group," the analyst wrote in a note.

JMP analyst Nicholas Jones noted guidance was disappointing, although he is "encouraged by the progress in eBay International Shipping (eIS) and 1P ads."

"Moving forward, we look for more evidence surrounding active buyer growth and TTM GMV per active buyer trends to become more constructive on the stock. We maintain our Market Perform rating and view shares as fairly valued," Jones said.

By Senad Karaahmetovic

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