EBay’s profits for the third quarter of the year fell slightly in the wake of its split from lucrative and faster growing payments business PayPal.
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Net revenue fell to US$2.1 billion from US$2.15 billion but was up about five per cent after excluding changes in currency rates. Two investment analysts have rated the stock with a sell rating, twenty have assigned a hold rating, fourteen have given a buy rating and one has given a strong buy rating to the company. Total revenue in the quarter of $2.1 billion was up 5% on an FX-Neutral basis and down 2% on an as-stated basis.
EBay expects full-year earnings in the range of $US1.80 to $US1.82 per share.
EBay shares rallied by as much as 12% on Thursday.
eBay’s (NASDAQ:EBAY) first stand-alone results (post PayPal separation) have somewhat exceeded our expectations, on both top-line and bottom-line. It also said that 2016 may be an outstanding year as the company faces easy comparisons and margin improvement opportunities, and it has $4 billion in new debt and free cash flow to buy back stock. The company is still getting used to life without PayPal (PYPL), which was officially spun off on July 17.
It’s a small victory for the big company, but a relatively major victory given eBay’s situation. Revenue of $2.1 billion matched the $2.1 billion analysts were looking for. Gross merchandise volumes also saw a six percent uptick quarter over quarter. We have $34.09 PT which if reached, will make EBAY worth $8.31B more. The stock has a market capitalization of $33.60 billion and a price-to-earnings ratio of 14.26.
eBay also based future success on giving the site’s most prolific and most profitable sellers an improved array of tools for their business, which include better execution time when it comes to inventory management and customer returns. (NASDAQ:EBAY) which led to swings in the share price.
The company added 8 million new active buyers in the latest quarter, up 5 percent from the same period a year ago.
“The results demonstrate the sound thinking behind reducing eBay to a more focused business that can concentrate on investing in, and evolving, its marketplaces rather than being distracted by payments or business services”, said Neil Saunders, chief executive of retail research firm Conlumino. At the time, the company’s apps had been downloaded 279 million times.
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Stock repurchase program – The company repurchased approximately $599 million of its common stock, or 21.9 million shares, in the third quarter.
