Fly Intel: What to watch in eBay earnings report

eBay (EBAY) is scheduled to report results of its fourth quarter after the market close on Tuesday, January 28, with a conference call scheduled for 5:00 pm ET. What to watch: 1. GROSS MERCHANDISE VOLUME: In the third quarter, eBay reported that its gross merchandise volume dropped 4% on an as-reported basis and 2% in constant currency, to $21.7B. This growth rate was flat from a Q2 GMV down 4% on a reported basis and flat in constant currency, following a flat growth rate in the prior quarter. In the company's Q3 conference call, eBay said, "Our marketplace platform GMV was down 2% in Q3, decelerating one-point versus the prior quarter. U.S. GMV was down 6% flat quarter-on-quarter with two points of deceleration from Internet sales tax, offset by reduced headwinds in marketing and modest conversion improvements from our evolving buyer experience, including the reduction of third-party ads." 2. GUIDANCE: With its last report, eBay guided to Q4 adjusted earnings per share of 73c-76c per share. The consensus forecast was 76c at the time of the company's report and has remained the same. The company pointed toward Q4 revenue of $2.77B-$2.82B. The consensus forecast, which was $2.85B at the time, has dropped to $2.81B. 3. INITIATIVES AND PARTNERSHIPS: In December, eBay's eBay Motors announced the launch of a new, automotive-focused app for Apple iPhone and Android. The app is a tool for buying and selling vehicles directly from consumers' mobile devices. Additionally in December, eBay announced the launch of zero selling fees for the first time for North America customers on any sneakers sold at $100 or more. 4. STUBHUB SALE: On November 25, the company announced it had entered into a definitive agreement to sell StubHub to viagogo for a purchase price of $4.05B in cash. The sale is expected to close by the end of the first quarter of 2020, subject to regulatory approval and customary closing conditions. "We believe this transaction is a great outcome and maximizes long-term value for eBay shareholders," said Scott Schenkel, interim CEO of eBay. "Over the past several months, eBay's leadership team and Board of Directors have been engaged in a thorough review of our current strategies and portfolio, and we concluded that this was the best path forward for both eBay and StubHub. We firmly believe in the StubHub business and we are excited about its future growth potential with viagogo as its owner." 5. ANALYST VIEW: Ahead of eBay's quarterly report, Susquehanna analyst Shyam Patil said he remains positive. The analyst sees opportunity for the company to pursue value-creating corporate actions with Classifieds and StubHub separations, optimization of its core businesses and potential sale, continued aggressive capital returns. Patil reiterated his Positive rating and $44 price target on eBay shares. Meanwhile, Wells Fargo analyst Brian Fitzgerald says that the shortened holiday sales calendar was likely a bigger headwind for the company versus peers, as he believes consumer perception lags eBay's actual shipping speed. Additionally, the analyst thinks eBay's marketing activity was notably light in Q4, likely presenting challenges for customer acquisition in Q4. While Fitzgerald expects Gross Merchandise Volume challenges continued in Q4, he models continued take rate expansion on lower promotional activity and Promoted Listings growth, while margins should benefit from muted promotions/marketing and continued operating expense discipline. He has an Underweight rating and $32 price target on eBay shares.