After reporting better than expected second quarter results, eBay stocks are trading higher. However, there are still some serious cracks showing within the business. The worst signs of weakness are in the core U.S. marketplace operation. More aggressive state tax enforcement on e-commerce companies is causing some serious setbacks. Even so, Wall Street analysts seem content with the current state of things.
Now, investors are changing their focus to news on eBay’s strategic review of its Classified Ads and StubHub businesses. Many analysts raised their target prices on eBay after estimate beating results and an update on eBay’s stock repurchase program. There was also a fair deal of optimism in regards to a strategic review being extremely beneficial to investors.
As reported before, eBay posted their second-quarter revenue, which ended up being $2.69 billion, up 2% from last year. This number was ahead of both the Wall Street estimate at $2.68 billion and the company’s own guidance range, which was $2.64 to $2.69 billion. The Non-GAAP profit was also ahead at 68 cents a share, as opposed to the Street’s cent prediction and the guidance range of 61 to 63 cents. The company also stated that it had bought back $1.5 billion of common shares in the quarter.
According to eBay, gross merchandise value in the quarter was $22.6 billion, which was down 4% but flat on a currency-neutral basis. Active buyers ultimately rose 4%, to a total of 182 million. Marketplace value was only up 1% at $2.2 billion, whereas both StubHub and Classified Ads revenue were up 7%, at $264 million and $271 million respectively.
For the third quarter, eBay estimates its revenue to be $2.61 to $2.66 billion, which is slightly below the Wall Street consensus of $2.68 billion. eBay estimated its non-GAAP profit to be 62 to 65 cents a share, close to the Street prediction of 63 cents.
In short, eBay stocks are doing relatively well compared to before, making a rebound after the sticky situation they found themselves in before. However, many analysts are worried about how long this good fortune will last, since many factors beyond the base are involved in the fluctuations of stocks. Many are still concerned that the steadily growing aggressiveness in collecting state taxes will serious hamper the growth of eBay and other e-commerce companies down the road.
Fact of the matter is, eBay stocks are doing well right this moment, but considering the dip they took just recently and the potential to drop again in the future, lots of individuals are wondering if now is a good time to invest, or a good time to remain cautious.
