eBay reports Q309 earnings after the bell. A conference call will be held at 5 PM EST and can be listened to here.
The Bottom Line: Consensus estimates are $2.1 billion in revenue and $0.37 in pro forma EPS. We believe it will likely meet Q309 consensus estimates. The EBAY shares are up about 12% since the beginning of September so we believe a solid quarter is priced into the shares.
If eBay meets expectations it will have returned to revenue growth again, which clearly is moving in the right direction. However, the company’s auction-based sales process and continued customer usability issues put it in a difficult competitive position with other e-commerce players like Amazon, which offers direct sales, better shipping deals, and a UI that has caused many sellers and buyers on eBay to move to Amazon. We believe this will likely continue to be the main focus from investors, given that Marketplace is about 80% of the company’s overall business.
Background: eBay currently trades at about 17-times pro forma 2009 EPS, which is a little rich, in our opinion. We believe the e-commerce industry will likely experience a strong Q409 holiday season given easy comps and a somewhat more stabilised economy versus last year, which will likley help the shares in the near-term. However, following any holiday shopping strength, we think the Marketplace issues should continue to weigh on the shares long-term.
Key Consensus Estimates:
- Revenue: $2.1 billion
- Pro Forma EPS: $0.37
Here is a snapshot from Citi analyst Mark Mahaney:
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