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Author: Alan LittleDate: 2021-10-29

eBay (EBAY) posts Q3 beats, but shares -7% on weak guidance

Ecommerce site eBay (EBAY) delivered Q3 earnings and revenue beats, but its shares dipped on Thursday as investors reacted to disappointing Q4 sales guidance.

eBay (EBAY) shares slumped 7% in trading on the Nasdaq on Thursday after guidance for weaker Q4 sales took the shine off the online auction site’s Q3 earnings and revenue beats.

eBay squeezed in just ahead of the Wall Street consensus for the latest quarter, with $0.90 earnings per share a single cent up on expectations and $2.5bn revenue trumping the $2.45bn forecasts.

CEO Jamie Iannone said that Q3 had been a “strong” period for eBay and that it had managed to fly past internal expectations for “all key business metrics”.

Iannone noted that important structural changes within the business were now bearing fruit, such as its switch to a new payment management system, which means that trusted sellers in the UK are now receiving funds within one business day.

However, investors will be concerned that user growth on eBay is slowing after active buyers tumbled 5% to 154 million in Q3, while the number of active sellers stayed the same at 19 million.

eBay’s conservative guidance for sales over the Christmas quarter is also unlikely to inspire confidence, especially as gross merchandise volume (GMV) already fell 10% in Q3.

In Q4, eBay is expecting earnings to top out at $1.01 per share, ahead of the $0.99 consensus, but revenue of between $2.57bn and $2.62bn underwhelmed slightly against the $2.61bn forecast.

Bulls will perhaps take solace in eBay’s 11% rise in Q3 revenue and its commitment to becoming more sustainable after setting a target to reduce emissions by 90% by the end of the decade.

EBAY slipped into negative territory early on Thursday though and was down 7.09% by late morning as traders bought and sold shares for $72.15.

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