EBay earnings forecast: Amazon has withered, let alone eBay

Reporting period: the second fiscal quarter of 2021

Release Date: August 11 (Wednesday) after hours

Expected revenue: $3 billion

Expected earnings per share: $0.95

eBay's (NASDAQ:EBAY) will announce its second quarter earnings report after the market on August 11 (Wednesday), but the market is not optimistic based on the stock price performance.

Since e-commerce overlord Amazon (NASDAQ:AMZN) announced unsatisfactory financial reports and worse-than-expected guidance at the end of last month, eBay, also an e-commerce company, has seen its stock price fall by 11%.

This is not surprising. After all, during the pandemic, people can only spend money on the Internet because they are stranded at home. However, the situation has changed after the ban was unblocked.

Amazon’s chief financial officer Brian Olsavsky said on the July 29 earnings call that more and more people are about to go on vacations and parties, "people will do what they avoided last year."

eBay also said in April that more and more people were vaccinated, companies resumed operations, funds from the stimulus plan dried up, spending on online shopping might be reduced, and e-commerce sales growth would also slow down, so eBay et al. Smaller e-commerce platforms are beginning to face the question of how many people will continue to use these platforms once the peak of the epidemic is over.

Business integration

However, JPMorgan Chase analysts still gave eBay a hold rating. The agency wrote in a report that multiple asset sales transactions helped eBay focus on retaining customers and attracting sellers. For the past two years, eBay has been consolidating businesses by selling assets and raising cash.

In 2019, eBay sold StubHub, a ticket business for sports events, concerts and other events, for more than 4 billion U.S. dollars. Last year, eBay sold its classified advertising business, and the deal brought in $2.5 billion in cash. In June of this year, eBay said it would sell most of its shares in the South Korean business for approximately US$3 billion.

eBay stated in an announcement:

"We believe these transactions create incremental strategic choices for eBay because it maintains its capital return strategy while in its core markets and accumulating new experience."

Jamie Iannone, eBay’s CEO who took office last year, is focusing on advertising and payment business to create more revenue and solve the possible slowdown in the company’s core business.

However, according to StreetAccount data, although eBay’s gross merchandise turnover (GMV) in the first quarter increased by 29% to $27.5 billion, the growth rate in the second quarter is expected to slow to around 5% from 6.6% in the same period last year.

On the other hand, analysts believe that eBay's stock price has not much upside after a 30% rise this year.

among the 30 analysts surveyed, 18 gave eBay a neutral rating and 12 gave a buy rating.