EBay Gives Optimistic Sales Forecast Buoyed by Jump in BuyersBy
EBay Inc. is finding its stride in the age of Amazon.
The online marketplace gave an optimistic revenue forecast for revenue for the current quarter, boosting investor confidence in the company’s efforts to generate more traffic on the site when customers have abundant ways to shop on the web. Gross merchandise volume, a key metric, rose 10 percent to $24.4 billion in the fourth quarter, the company said Wednesday, as the number of active buyers on the platform increased.
"For EBay to get anything to grow at double digits is a real positive," said Kerry Rice, an analyst at Needham & Co. "It’s been a long time since they’ve seen any kind of growth in the double digits."
Chief Executive Officer Devin Wenig is trying to speed EBay’s growth to prove that his turnaround strategy is working and the holiday shopping quarter was the big test. In June, EBay announced a price-match guarantee on more than 50,000 items to lure bargain hunters to its site. It rolled out free three-day shipping on millions of products to compete with Amazon’s two-day delivery pledge for its Prime members. EBay launched an authentication service in September to boost sales of luxury handbags that are often targets of counterfeiting.
Revenue will be $2.57 billion to $2.61 billion in the first quarter of 2018, San Jose, California-based EBay said in a statement. Analysts on average estimated $2.4 billion, according to data compiled by Bloomberg. Adjusted earnings per share will be as much as 54 cents a share, compared with analysts’ projections of 52 cents.
Fourth-quarter profit was 59 cents per share on revenue of $2.6 billion, in line with analysts’ estimates.
The shares rose as much as 8.4 percent to $44 in after-hours trading after closing at $40.58 in New York. EBay is up 27 percent in the past 12 months.
EBay has increased spending on marketing, redesigned its homepage to personalize products shown to each visitor and has an initiative to make it easier for shoppers to navigate the site’s 1 billion listings. The e-commerce pioneer wants to remain relevant as consumers find more online shopping options.