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Here's What to Expect From eBay's Q4 Earnings Results Tuesday

Benjamin Rains

Shares of eBay EBAY popped 0.89% during regular trading hours Monday, one day before it is set to report its fourth quarter financial results. So, let’s see what investors should expect from the e-commerce giant’s earnings Tuesday.

Overview

Today, roughly 10% of eBay’s items are sold via auction and less than 20% of items are second-hand. This might come as a bit of a surprise to some since eBay rose to prominence as an auctioned-based website to buy used goods. The company also announced last year that it will stop using PayPal PYPL, which it spun off in 2015, as its back-end payments service after 2020. EBay is set to transition to its new Adyen-based payment system—the firm boasts clients such as Uber, Spotify SPOT, and Microsoft MSFT.

Investors should note that activist shareholder Elliott Management, which owns more than 4% of eBay stock, last week said that eBay should think about moving on from StubHub and its portfolio of Classifieds properties. “In addition to unlocking substantial value, separating these assets would allow eBay’s management team to refocus its efforts solely on the core Marketplace business,” the firm wrote in a letter to eBay.

EBay said it will “carefully review and evaluate Elliott's proposals.” And the firm might seriously consider Elliott's suggestion since eBay stock has clearly performed far worse than the e-commerce industry average over the last two years. This group obviously includes giants Amazon AMZN and Alibaba BABA, but shares of eBay are down roughly 17% over the last year despite its massive post-Christmas rally.

 

 

Q4 Outlook

Moving on, eBay’s Q4 revenues are projected to jump 9.73% to reach $2.87 billion, based on our current Zacks Consensus Estimate. This would come in above last quarter’s 6% climb. At the same time, eBay’s gross merchandise volume is projected to pop 3.7% to reach $25.317 billion, based on our NFM estimates, which would fall short of Q3’s 5% GMV expansion. 

Meanwhile, eBay’s active buyer base is expected to reach 178.18 million in Q4. This would mark a 1.18 million sequential jump and a 4.8% climb from the year-ago period—Q3’s active buyer base popped 4%.

At the bottom end of the income statement, eBay’s adjusted quarterly earnings are expected to jump 15.25% to reach $0.68 per share. Investors should note that this estimate would come in below Q3’s 19% EPS growth.

Bottom Line

EBay is currently a Zacks Rank #3 (Hold) based mostly on its recent earnings estimate revision activity. The e-commerce firm is expected to release its Q4 financial results after the closing bell Tuesday, so make sure to come back to Zacks for a full breakdown.

Apple AAPL, Facebook FB, Microsoft, and other tech giants all report earnings this week as well (also read: What to Expect from Apple's Earnings, iPhone, Services & Chinese Revenues).

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