eBay Projects Annual Profit That Tops Analysts’ Estimates
(Bloomberg) -- EBay Inc. gave an upbeat profit forecast for the rest of the year, signaling a busy holiday quarter and calming investor fears about slowing sales. The shares gained about 3 percent Wednesday morning.
Earnings, excluding some items, will be $2.29 a share to $2.31 a share for the year, the San Jose, California-based company said Tuesday in a statement. The profit outlook topped analysts’ average estimate of $2.28. Third-quarter adjusted earnings were 56 cents a share. Analysts’ projected 55 cents a share.
Chief Executive Officer Devin Wenig is trying to differentiate the online marketplace as a destination for deals and discovery without membership fees. Many shoppers on e-commerce giant Amazon.com Inc. pay monthly or yearly fees for Prime membership to get delivery discounts, video streaming and other services.
Total gross merchandise volume, a key metric, rose 4.8 percent to $22.7 billion, EBay said. Active customer accounts grew 4 percent to 177 million worldwide.
Revenue gained 6 percent to $2.65 billion in the third quarter, in line with analysts’ estimates. The company projected sales of $2.85 billion to $2.89 billion in the holiday quarter, which would fall just short of the average estimate of $2.9 billion.
The results are likely to assuage investors concerned that EBay can’t compete with Amazon and retail rivals moving online such as Walmart Inc. PayPal Holdings Inc., which processes EBay payments, signaled in its earnings report earlier this month that sales were slowing on the online marketplace.
“PayPal’s report put a lot of pressure on EBay shares,” said Tom Forte, analyst with DA Davidson & Co. “While this wasn’t a quarter to write home about, it’s not as bad as people were expecting.”
The shares rose as much as 7.4 percent as the market opened in New York on Wednesday, but those gains were paired to 2.7 percent by 9:54 a.m. EBay’s stock is down more than 40 percent from its closing peak of $46.19 in February, including 18 percent this month through Tuesday.
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