Fly Intel: What to watch in eBay earnings report

eBay (EBAY) is scheduled to report results of its third quarter after the market close on Wednesday, October 28, with a conference call scheduled for 5:00 pm ET. What to watch: 1. GROSS MERCHANDISE VOLUME: In Q2, eBay reported that its gross merchandise volume was $27.1B, up 26% on an as-reported basis and 29% in constant currency. This growth rate rose from a Q1 GMV down 1% on a reported basis and flat in constant currency, following a drop in growth rate in the prior quarter. 2. GUIDANCE: Along with Q2 earnings, the company guided to Q3 adjusted earnings per share of 81c-87c per share. The consensus forecast, which was 81c at the time, has risen to 86c. The company pointed toward Q3 revenue of $2.64B-$2.71B. The consensus forecast, which was $2.55B at the time, has risen to $2.69B. 3. INITIATIVES AND PARTNERSHIPS: In July, eBay Motors launched new escrow services and chat features in its app to give buyers added security. The company also announced in July it had begun expanding its management of payments globally and it had partnered with PROVA Group and founder Emmitt Smith to offer witnessed authentication services. In August, eBay announced a collaboration with LendingPoint to give sellers in the U.S. access to funding and in September, the company announced it would offer shipping through UPS (UPS) on its marketplace. Additionally in September, eBay launched "Authenticity Guarantee", a post-sale authentication service for watches sold for $2,000 or more. The company also announced it had expanded management of payments to France, Italy and Spain. 4. CLASSIFIEDS SALE: In February, Starboard Value, one of the largest shareholders of eBay, delivered a letter to the company saying it believed eBay is "deeply undervalued" and that the company must commit to separation of its Classified business. In July, eBay announced it would sell its Classified Group to Adevinta for a total consideration valued at $9.2B. The transaction is expected to close by Q1 of 2021. 5. ANALYST VIEWS: Earlier in October, Piper Sandler analyst Thomas Champion said he believes consensus estimates for eBay's 2022 revenue remain too low. The analyst expects the company's payments and other new product revenues to "gain scale," and sees a 2022 feasible revenue range of $11.6B to $14.7B for eBay. Management guidance for $2B in incremental payment revenue looks conservative and most Street models do not yet include new products, which could make the company's Q3 earnings report a catalyst, Champion said. He reiterated an Overweight rating on eBay with a $65 price target. Additionally, Mizuho analyst James Lee raised the firm's price target on eBay to $55 from $52 and kept a Neutral rating on the shares. The analyst said he came away from recent channel checks positive on eBay's quarter due to accelerated search traffic growth. This indicates that eBay's quarter gross merchandise volume growth could be tracking ahead of estimates, Lee said.