eBay Inc. (EBAY) shares took a nosedive in pre-market trading on Thursday, following the release of the company’s third-quarter earnings report. While the e-commerce giant managed to beat analysts’ estimates for revenue and earnings per share, its outlook for the fourth quarter and fiscal year 2024 fell short of expectations, leaving investors disappointed.
The company reported revenue growth of 3% year-over-year, reaching $2.58 billion, exceeding the consensus estimate of $2.54 billion. Gross Merchandise Volume (GMV) also saw a positive bump, reaching $18.3 billion, representing a 2% increase on an as-reported basis and 1% on an FX-neutral basis.
Adjusted operating margin stood at a respectable 27.2%, a slight uptick from 26.4% in the previous year. Adjusted earnings per share (EPS) came in at $1.19, surpassing the consensus estimate of $1.18.
eBay’s strong cash flow performance continued in the quarter, with the company generating $755 million in operating cash flow and $646 million in free cash flow. As of September 30th, the company held $5.8 billion in cash, cash equivalents, and non-equity investments.
To further enhance shareholder value, eBay returned a substantial $881 million to stockholders during the quarter, comprising $750 million in share repurchases and $131 million in cash dividends.
Despite the positive aspects of the earnings report, eBay’s guidance for the remainder of the year proved to be a major cause for concern. For the fourth quarter, the company anticipates revenue in the range of $2.53 billion to $2.59 billion, representing a 1% decline to a 1% increase on an FX-Neutral basis. This projection falls short of the consensus estimate of $2.65 billion.
The company also forecasted adjusted EPS for the fourth quarter to be between $1.17 and $1.22, compared to the consensus estimate of $1.22. For the full fiscal year 2024, eBay expects revenue in the range of $10.23 billion to $10.29 billion, compared to the consensus estimate of $10.32 billion. The company anticipates adjusted EPS for the year to be between $4.80 and $4.85, compared to the consensus estimate of $4.83.
The market reacted negatively to this weaker-than-expected outlook, with eBay shares plummeting by 9.95% to $56.40 in pre-market trading on Thursday.
Investors interested in gaining exposure to the online retail sector can consider ETFs such as the ProShares Online Retail ETF (ONLN) and the Global X E-commerce ETF (EBIZ).
This news report is provided for informational purposes only and does not constitute financial advice.
