eBay Inc. (NYSE: EBAY) has confirmed the release date for its Q4 2021 earnings, which is on Wednesday, February 23, 2022, after.
What to look for: The company’s business thrived at the start of the pandemic, with consumers turning to online shopping. However, with millions of people receiving COVID-19 jabs, consumers have resumed their old shopping ways. The shift in behaviour has hurt the company's customer engagement and sales. Also, increasing supply chain constraints and shortages will feature prominently in the company's upcoming earnings release. It is one metric investors will be keen on once the company declares its results.
Earnings: Stockearning’s Estimated EPS for the quarter under review is expected to be around $0.82 per share. In the third quarter, the company produced an earnings surprise of 2.78% with actual EPS of $0.74. Historical EPS Performance shows that in the past 12 quarters, the company topped estimates 23 times (65%), matched thrice (3%) and missed five times (14%).
Revenue: For fiscal Q4 2021, the company expects revenue of $2.6 billion. In the third quarter, the company reported revenue of $2.5 billion, topping projected revenue of $2.46 billion. Gross merchandise volume dropped 10% in the third quarter to 19.5 billion from a year ago. GMV is vital in measuring transaction value on the platform.
Stock Movement: EBAY shares have lost 22.8% since the company released its third-quarter earnings. Interestingly, the company’s shares have been UP 27 times out of the past 48 quarters. So, the historical price reaction suggests a 56% probability of the share price going UP following the fiscal Q4 2021 earnings release. According to the Stockearning algorithm, the predicted first-day move is +/-5%, while the predicted move on the seventh day is +/-6%.
What analysts are saying: JPMorgan analyst Doug Anmuth reinstated coverage on EBAY with a Hold rating and a price target of $70 after a period of restriction. Anmuth told investors in a research note that the company has executed well to simplify its portfolio and enhance margins, but product innovation efforts are still in the early days.
UBS analyst Kunai Madhukar assumed coverage on EBAY and upgraded the stock from Hold to Buy with a target price of $80. The analyst believes Wall Street is underestimating eBay's advertising potential, especially because it recently introduced three new advertisement units, including offsite advertisements "which will not be constrained by inventory," compared to solely promoted ads previously. In addition, because eBay's take rate is smaller than that of other platforms like Etsy and Amazon, business-to-consumer sellers that offer on several platforms may potentially spend more in advertising fees if quicker sales velocity ensued, according to Madhukar.
Guggenheim analyst Seth Sigman downgraded eBay from Buy to Hold and slashed the price target to $80 from $85 as he assumed coverage on the stock. He finds a compromise between his positive assessment of leadership and their strategic vision and short-term growth pressure, dropping buyer counts, higher competition dynamics, and a "near-peak" value.
Goldman Sachs's Eric Sheridan reinstated coverage on EBAY with a Hold rating and price target of $84. According to the analyst, eBay will face "a few important discussions in the years ahead" about how its regulated growth will stabilize in a post-pandemic environment and whether it can find the right balance between the need to spend in broader platform expansion ambitions and profitability.
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