| 2019-04-23 12:12:55|
EBAY, GOOG… 12:12 04/23 04/23/19
Fly Intel: What to watch in eBay earnings report
eBay (EBAY) is scheduled to report results of its first quarter after the market close on Tuesday, April 23, with a conference call scheduled for 5:00 pm ET. What to watch: 1. GROSS MERCHANDISE VOLUME: In the fourth quarter, eBay reported that its gross merchandise volume, or the amount of sales it helps facilitate, grew 1% on an as-reported basis, and 2% in constant currency, to $24.6B. This growth rate was down from the third quarter growth of 5% on a reported basis, and 5% in constant currency, following a decrease in growth rate in the prior quarter. Investors will be anxious to see if the company can re-accelerate GMV growth. 2. GUIDANCE: With its last report, eBay guided to Q1 adjusted earnings per share of 62c-64c per share. The consensus forecast, which was 61c at the time of the company's report, has slightly increased to 63c. The company pointed toward Q1 revenue of $2.55B-$2.6B. The consensus forecast, which was $2.66B at the time, has dropped to $2.58B. 3. INITIATIVES AND PARTNERSHIPS: eBay has taken on a number of initiatives and partnerships to improve the user experience and visibility. In February, the company announced that it is bringing its geographic regions together under one global leadership team that will be led by Jay Lee, SVP, general manager, markets. The markets included in the new structure are the Americas, APAC, UK, Central and Southern Europe, as well as Cross-Border Trade. Additionally in February, eBay announced it completed the acquisition of Motors.co.uk, a UK-based classifieds site focused on car buying and selling. The Motors.co.uk team has joined Gumtree UK, an eBay Classifieds business, and, together with eBay Motors UK, will offer more than 620,000 car listings across platforms. In March, eBay announced it would introduce Google Pay (GOOG, GOOGL) to its suite of payment options to further increase customer choice in its new managed payments experience. eBay chief executive officer Devin Wenig also release his annual letter to shareholders in March saying the company will continue to invest aggressively in advertising and payments. The CEO said, "We will ensure we achieve the right balance between user experience and monetization as we build towards $1B advertising revenue opportunity. And we continue to expect to begin a full rollout of Payments in 2020, building toward a $2B revenue opportunity at scale." 4. ACTIVIST INVESTORS: On January 22, Elliott Management announced an over 4% stake in eBay and said it sees a path to $55-$63 per share. In a letter, Elliott urged eBay's board to adopt a five-step plan, consisting of undertaking a comprehensive portfolio review including a separation of Stubhub and its Classified properties, "revitalizing" Marketplace, making operational improvements and margin expansion, returning substantial capital to shareholders and needing "effective leadership and oversight." In March, eBay announced several new strategic initiatives to enhance performance, including an operating review and the commencement of a strategic review of the company's portfolio of assets, including StubHub and eBay Classifieds Group. The company said at the time, "eBay has worked collaboratively with Elliott Management, Starboard Value, and other significant shareholders on these initiatives, which include the addition of two new independent directors to the Board." The company also entered into cooperation agreements with affiliates of Elliot and Starboard. 5. ANALYST VIEW: On April 16, Baird analyst Colin Sebastian slightly lowered his Q1 revenue estimate for eBay after his proprietary survey of volume in March suggested a mid-single-digit year-over-year volume decline in gross merchandise volume growth. In total, his Q1 tracker suggests low single-digit declines in GMV, noted Sebastian, who kept an Outperform rating on eBay shares given the potential he sees for "constructive outcomes" from its strategic review process.
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