Shares of eBay (NASDAQ:EBAY) dropped about 7% in yesterday’s after-hours. The decline comes after the release of mixed third-quarter results and weak revenue guidance for the December holiday quarter. The company’s Q3 performance has been affected by reduced consumer spending as high-interest rates and inflation continue to put pressure on consumers’ budgets.
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eBay is an online marketplace where individuals and businesses buy and sell a wide range of goods and collectibles.
eBay’s Q3 adjusted earnings per share increased over 3% year-over-year to $1.03, surpassing analysts’ estimates of $1. Meanwhile, revenue increased 5% to $2.5 billion and came in line with the analysts’ estimates. The company attributed its performance to a 24% year-over-year jump in advertising revenue, with support from higher first-party ads.
Overall, eBay’s gross merchandise volume (GMV) rose 2% to $18 billion in the third quarter, driven by an uptick in refurbished GMV. Excluding currency headwinds, GMV remained nearly flat. Additionally, active buyers on the platform were down 3% year-over-year to 132 million.
Q4 and 2023 Outlook
Looking ahead, eBay expects its Q4 2023 revenue in the range of $2.47 to $2.53 billion, which reflects organic forex-neutral growth in the range of (1%) to 2%. It projects Q4 adjusted EPS between $1 and $1.05. Analysts were expecting revenue of $2.6 billion and earnings of $1.04 per share.
For the full year 2023, eBay has projected its revenue to fall within the range of $10.02 billion to $10.08 billion, along with adjusted EPS between $4.17 and $4.22 per share. At the same time, analysts had anticipated revenue of $10.16 billion and adjusted earnings of $4.14 per share.
Is eBay Stock a Buy or Sell?
Rising competition from e-commerce giants like Amazon (AMZN), falling active buyers, and persistent inflation impacting consumers’ spending power have kept Wall Street analysts on the sidelines.
Overall, eBay stock has a Hold consensus rating, based on two Buy, five Hold, and one Sell recommendations. The average stock price target of $46.25 implies 13.4% upside potential. Shares of the company have lost 1.6% year-to-date.
