EBay Forecasts Sales That May Miss Estimates on Fierce Rival

  • Share drop on muted outlook for holiday shopping season
  • Active accounts reach 165 million, up 4 percent from year ago

EBay Inc. projected revenue and profit in the current quarter that may miss analysts’ estimates, showing the momentum the online marketplace gained earlier this year may not carry into the holiday shopping season dominated by e-commerce leader Amazon.com Inc.

The shares dropped as much as 8.9 percent in extended trading after closing at $32.52 in New York.

Key Points

  • Revenue in the current quarter will be $2.36 billion to $2.41 billion, San Jose, California-based EBay said Wednesday in a statement. Analysts on average estimated $2.4 billion, according to data compiled by Bloomberg.
  • Adjusted profit will be 52 cents to 54 cents a share. Analysts projected 54 cents.
  • Gross merchandise volume gained 2.6 percent to $20.1 billion in the third quarter.
  • Revenue from StubHub, the company’s marketplace for concert and event tickets, increased 32 percent to $263 million.

The Big Picture

EBay is looking to accelerate sales growth on its marketplace to catch up with Amazon and compete with brick-and-mortar retailers that also sell online. The holiday shopping period will be a test of Chief Executive Officer Devin Wenig’s investments in a structured data initiative to better manage the site’s inventory and a rebranding campaign. He is emphasizing EBay as a destination for difficult-to-find items, trying to to differentiate it from Amazon, which is known for quick delivery.

Street Takeaways

  • “It’s a muted outlook. The core marketplace business doesn’t seem to have turned a corner as much as it could have,” said Ron Josey, an analyst at JMP Securities.
  • “There’s just constant concern about growth and attracting users,” said Kerry Rice, an analyst at Needham & Co. “At 165 million, the attraction of consumers is a little light and underwhelming. If you piece it all together, you have to spend more on marketing which cause margins to come in.”
  • “What is boils down to mostly is the minimal uplift expected for the fourth quarter,” James Cakmak, analyst at Monness Crespi Hardt & Co., said.

The Detail

  • EBay said revenue increased 5.6 percent to $2.22 billion in the third quarter. Analysts estimated $2.19 billion.
  • The company reported 165 million active accounts, up 3.8 percent from a year earlier.

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