Fly Intel: What to watch in eBay earnings report

eBay (EBAY) is scheduled to report results of its second quarter after the market close on Wednesday, July 17, with a conference call scheduled for 5:00 pm ET. What to watch: 1. GROSS MERCHANDISE VOLUME: In the first quarter, eBay reported that its gross merchandise volume dropped 4% on an as-reported basis and 1% in constant currency, to $24.6B. This growth rate was down from Q4 growth of 1% on a reported basis and 2% in constant currency, following a decrease in growth rate in the prior quarter. In the Q1 report, the company said, "eBay continued its multi-year path toward managed payments, intermediating $220M in GMV in the first quarter - a 61% quarter-over-quarter increase - bringing the total GMV enabled since launch to $363M and saving sellers $2.7M in payment-related costs." 2. GUIDANCE: With its last report, eBay guided to Q2 adjusted earnings per share of 61c-63c per share. The consensus forecast, which was 60c at the time of the company's report, has slightly increased to 62c. The company pointed toward Q2 revenue of $2.64B-$2.69B. The consensus forecast, which was $2.65B at the time, has risen to $2.68B. 3. INITIATIVES AND PARTNERSHIPS: Along with its Q1 report, the company announced Germany will be its second market for managed payments. The company also noted the addition of Google Pay (GOOG, GOOGL) as a payment option and the completed integration of PayPal (PYPL) on the new platform. eBay also unveiled several new initiatives for buyers and sellers. Additionally, the company delivered a series of enhancements to the Seller Hub and introduced a new 'Offer to Buyers' feature that enables sellers to proactively make offers to interested buyers. In May, eBay announced a partnership with CarAdvise, a vehicle repair and maintenance technology platform, to expand the marketplace's Tire Installation Program initially adding 3,500 tire shops to eBay's tire installer network. Meanwhile in June, the company and luxury vintage retailer What Goes Around Comes Around partnered to launch a series of exclusive capsule collections. 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. On April 30, eBay chief executive officer Devin Wenig told CNBC the company was still reviewing its Classified and StubHub businesses. 5. ANALYST VIEW: On July 16, Stifel analyst Scott Devitt noted that his revenue forecast is modestly below consensus while his non-GAAP EPS estimate is in-line with the consensus view. While he believes Promoted Listings will continue to be a bright spot, Devitt expects eBay share to "relatively range bound in the intermediate term" as he thinks favorable developments related to its strategic review are needed before shares will move meaningfully higher. Devitt kept a Hold rating and $41 price target on eBay shares. Additionally, Baird analyst Colin Sebastian said his proprietary survey of eBay volume suggests year-over-year volume declines persisted into June, partially reflecting tougher comps from elevated promotional activity last year. The analyst said trends may show early improvement in Q3 as the survey showed signs of improvement in July. Sebastian maintained his Outperform rating and $44 price target on eBay shares.