Shares of eBay Inc (NASDAQ: EBAY) fell 8
percent in Thursday’s pre-market after the company reported a soft Marketplace GMV and active buyer growth for the third quarter
and disappointing fourth-quarter guidance amid heightened expectations.
Total GMV grew 5.5 percent, though U.S. Marketplace GMV decelerated on an easier comp. EBay added over 1 million active buyers
in the third quarter, bringing the total to 165 million global active buyers.
Although eBay’s adjusted EPS and revenue beat consensus estimates, the company’s outlook for the key holiday shopping quarter
was disappointing, triggering concerns among investors.
For the fourth quarter, the company sees adjusted EPS of $0.52–$0.54 on revenue of $2.36 billion–$2.41 billion. Street expects
EPS of $0.54 on revenue of $2.40 billion.
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For the full-year 2016, eBay expects adjusted EPS of $1.85–$1.90 on revenue of $8.95 billion–$9.0 billion versus consensus view
of $1.89/$8.95 billion.
“Expectations were for upside in 3Q16 and for positive momentum clearly reflected in 4Q16 guidance, and unfortunately the report
fell short of those expectations,” Citi analyst Mark May wrote in a note.
May still has a Buy rating on the stock with a target price of $34, saying the stock’s valuation is not reflecting the potential
of the company’s growth improvement initiatives.
“Moreover, we see downside as limited given: 1) the valuation (12x EV/FCF, 8 percent FCF yield); 2) the company’s ability to
continue to significantly shrink its share base via buybacks; and, 3) eBay’s potential strategic M&A value,” May added.
Shares of eBay closed Wednesday’s trading at $32.52. In the pre-market hours Thursday, they dropped 8.43 percent to $29.78.
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