eBay surges nearly four per cent as earnings beat estimates

The shares of e-commerce giant eBay surged nearly 4% in extended trading sessions after it exceeded market expectations for both quarterly revenue and profit, largely driven by strong consumer spending during the holiday period. 

Notably, eBay saw robust performance in its core categories such as refurbished goods and auto parts. Moreover, the company’s board of directors greenlit an additional $2 billion share repurchase program, indicating confidence in its financial standing and growth prospects. 

eBay reported quarterly revenue of $2.56 billion, surpassing analysts’ forecasts of $2.51 billion. Similarly, its adjusted profit per share came in at $1.07, exceeding the anticipated $1.03 per share, Reuters reported. 

“eBay’s focus on enhanced user experience, strength in marketplace business, opportunities in the fast-growing mobile commerce, and collectible market prospects remains a positive,” noted ZACKS Research analysts highlight reasons to buy. 

Looking ahead, eBay provided optimistic forecasts for the first quarter, projecting revenue to range between $2.50 billion and $2.54 billion, slightly below analysts’ expectations of $2.54 billion.  

However, the company anticipates adjusted earnings per share to fall between $1.19 and $1.23, surpassing the estimated $1.13 per share. 

“In an increasingly competitive resale environment with >25 VC-funded resale peers (mostly founded in the past 15 years) all fighting for scale, we see EBAY as a share loser as customers gravitate towards the new entrants,” noted Lauren Schenk, Equity Analyst at Morgan Stanley. 

“We believe EBAY’s focus category strategy will push it increasingly towards less scalable investments as it has to verticalize the platform in order to compete with the new entrants. As a result, we see adj. operating margin falling over the next few years to <26%.”